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.