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Macro Pulse highlights recent activity and events expected to affect the U.S. economy over the next 24 months. While the review is of the entire U.S. economy its particular focus is on developments affecting the Forest Products industry. Everyone with a stake in any level of the sector can benefit from
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Tuesday, November 5, 2019

September 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 September decreased 0.2% to $501.1 billion. Durable goods shipments decreased 0.5% to $252.1 billion. Meanwhile, nondurable goods shipments increased 0.1% to $249.0 billion. Shipments of wood products fell by 0.6% while paper edged up 0.1%. 
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Inventories increased 0.3% to $697.9 billion. The inventories-to-shipments ratio was 1.39, unchanged from August. Inventories of durable goods increased 0.5% to $430.3 billion. Nondurable goods inventories increased 0.1% to $267.6 billion. Inventories of wood products contracted 0.4%; paper: -0.2%. 
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New orders decreased 0.6% to $496.7 billion. Excluding transportation, new orders edged down by 0.1% (+0.1% YoY). Durable goods orders decreased 1.2% to $247.7 billion. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending – fell by 0.6% (0.0% YoY). New orders for nondurable goods increased 0.1% 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 51% of the ground given up in the Great Recession. 
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Unfilled durable-goods orders were essentially unchanged at $1,163.3 billion. The unfilled orders-to-shipments ratio was 6.69, up from 6.68 in August. 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.

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