September 2015 Manufacturers’ Shipments, Inventories, and New & Unfilled Orders

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According to the U.S. Census Bureau, the value of manufactured-goods shipments decreased $1.8 billion or 0.4% to $477.3 billion in September. Shipments of durable goods increased $0.2 billion or 0.1% to $242.2 billion, led by transportation equipment. Meanwhile, nondurable goods shipments decreased $2.0 billion or 0.8% to $235.1 billion, led by petroleum and coal products. Shipments of Wood rose 1.4% while Paper fell 0.4%. 

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Inventories decreased $2.4 billion or 0.4% to $645.1 billion. The inventories-to-shipments ratio was 1.35, unchanged from August. Inventories of durable goods decreased $1.5 billion or 0.4% to $399.1 billion, led by transportation equipment. Nondurable goods inventories decreased $0.9 billion or 0.4% to $246.1 billion, led by petroleum and coal products. Inventories of Wood expanded by 0.3% while Paper was unchanged. 

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New orders decreased $4.7 billion or 1.0% to $466.3 billion. Excluding transportation, new orders decreased 0.6% (-8.6% YoY -- the eleventh consecutive month of year-over-year contractions). Durable goods orders decreased $2.8 billion or 1.2% to $231.2 billion, led by transportation equipment. New orders for nondurable goods decreased $2.0 billion or 0.8% to $235.1 billion. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- fell by 0.1% in September (-7.5% YoY).

Prior to July 2014, as can be seen in the graph above, real (inflation-adjusted) new orders had been essentially flat since early 2012, recouping roughly 78% of the losses incurred since the beginning of the Great Recession. With July 2014’s transportation-led spike gradually receding in the rearview mirror, new orders are back to 55% of their December 2007 high. 

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Unfilled durable-goods orders decreased $6.2 billion or 0.5% to $1,187.9 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.88, down from 6.89 in August. Real unfilled orders, which had been a good litmus test for sector growth, show a much different picture; in real terms, unfilled orders in June 2014 were back to 97% of their December 2008 peak. Real unfilled orders jumped to 122% of the prior peak in July 2014, thanks to the largest-ever batch of aircraft orders, but have since moved sideways and are now on the cusp of falling below the January 2010-to-June 2014 trend line.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.