May 2019 Manufacturers’ Shipments, Inventories, and New & Unfilled Orders

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According to the U.S. Census Bureau, the value of manufactured-goods shipments in May increased $0.4 billion or 0.1% to $504.3 billion. Durable goods shipments increased $0.9 billion or 0.3% to $254.2 billion led by machinery. Meanwhile, nondurable goods shipments decreased $0.5 billion or 0.2% to $250.1 billion, led by petroleum and coal products. Shipments of wood products were unchanged; paper: +0.6%. 

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Inventories increased $1.4 billion or 0.2% to $694.1 billion. The inventories-to-shipments ratio was 1.38, up from 1.37 in April. Inventories of durable goods increased $2.0 billion or 0.5% to $424.6 billion, led by transportation equipment. Nondurable goods inventories decreased $0.6 billion or 0.2% to $269.6 billion, led by petroleum and coal products. Inventories of wood products shrank by 0.2%; paper: +0.4%. 

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New orders decreased $3.6 billion or 0.7% to $493.6 billion. Excluding transportation, new orders inched up by 0.1% (+0.1% YoY). Durable goods orders decreased $3.1 billion or 1.3% to $243.5 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- rose by 0.5% (+1.0% YoY). New orders for nondurable goods decreased $0.5 billion or 0.2% to $250.1 billion.

As can be seen in the graph above, real (inflation-adjusted) new orders were essentially flat between early 2012 and mid-2014, recouping on average less than 70% of the losses incurred since the beginning of the Great Recession. The recovery in real new orders is back to just 49% of the ground given up in the Great Recession. 

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Unfilled durable-goods orders decreased $6.3 billion or 0.5% to $1,171.1 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.64, down from 6.69 in April. Real unfilled orders, which had been a good litmus test for sector growth, show a less positive picture; in real terms, unfilled orders in June 2014 were back to 97% of their December 2008 peak. Real unfilled orders then jumped to 102% of the prior peak in July 2014, thanks to the largest-ever batch of aircraft orders. Since then, however, real unfilled orders have been going sideways-to-down.

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.