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

Click image for larger view 

Click image for larger view

According to the U.S. Census Bureau, the value of manufactured-goods shipments in October increased less than $0.1 billion or virtually unchanged to $500.2 billion. Durable goods shipments decreased less than $0.1 billion or virtually unchanged to $251.6 billion, led by transportation equipment. Meanwhile, nondurable goods shipments increased $0.1 billion or virtually unchanged to $248.6 billion, led by petroleum and coal products. Shipments of wood products rose by 0.5% while paper edged down 0.1%. 

Click image for larger view

Inventories increased $0.9 billion or 0.1% to $698.8 billion. The inventories-to-shipments ratio was 1.40, unchanged from September. Inventories of durable goods increased $1.6 billion or 0.4% to $432.2 billion, led by transportation equipment. Nondurable goods inventories decreased $0.7 billion or 0.3% to $266.6 billion, led by food products. Inventories of wood products expanded 0.1%; paper: -0.2%. 

Click image for larger view

New orders increased $1.4 billion or 0.3% to $497.0 billion. Excluding transportation, new orders rose by 0.2% (-1.3% YoY). Durable goods orders increased $1.3 billion or 0.5% to $248.4 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- jumped by 1.1% (-0.5% YoY). New orders for nondurable goods increased $0.1 billion or virtually unchanged to $248.6 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 50% of the ground given up in the Great Recession. 

Click image for larger view

Unfilled durable-goods orders increased $1.0 billion or 0.1% to $1,164.3 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.67, down from 6.70 in September. 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.