August 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 August decreased $0.7 billion or 0.1% to $503.0 billion. Durable goods shipments increased $0.1 billion or 0.1% to $253.9 billion led by machinery. Meanwhile, nondurable goods shipments decreased $0.8 billion or 0.3% to $249.0 billion, led by petroleum and coal products. Shipments of wood products jumped by 1.6% while paper rose 0.2%. 

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Inventories decreased $0.3 billion or virtually unchanged to $695.9 billion. The inventories-to-shipments ratio was 1.38, unchanged from July. Inventories of durable goods increased $1.1 billion or 0.2% to $428.3 billion, led by transportation equipment. Nondurable goods inventories decreased $1.4 billion or 0.5% to $267.6 billion, led by petroleum and coal products. Inventories of wood products and paper both expanded by 0.4%. 

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New orders decreased $0.4 billion or 0.1% to $499.8 billion. Excluding transportation, new orders were essentially unchanged (-1.5% YoY). Durable goods orders increased $0.4 billion or 0.2% to $250.7 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending – fell by 0.4% (-1.8% YoY). New orders for nondurable goods decreased $0.8 billion or 0.3% to $249.0 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 52% of the ground given up in the Great Recession. 

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Unfilled durable-goods orders increased $1.1 billion or 0.1% to $1,162.9 billion, led by fabricated metal products. The unfilled orders-to-shipments ratio was 6.66, down from 6.67 in July. 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 trending 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.