November 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 November increased $1.7 billion or 0.3% to $502.2 billion. Durable goods shipments increased $0.1 billion or virtually unchanged to $251.4 billion, led by electrical equipment. Meanwhile, nondurable goods shipments increased $1.6 billion or 0.6% to $250.8 billion, led by petroleum and coal products. Shipments of wood products jumped by 1.5%; paper +0.2%. 

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Inventories increased $2.0 billion or 0.3% to $701.0 billion. The inventories-to-shipments ratio was 1.40, unchanged from October. Inventories of durable goods increased $1.6 billion or 0.4% to $433.7 billion, led by transportation equipment. Nondurable goods inventories increased $0.3 billion or 0.1% to $267.3 billion, led by petroleum and coal products. Inventories of wood products shrank by 0.3%; paper: -0.1%. 

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New orders decreased $3.6 billion or 0.7% to $493.0 billion. Excluding transportation, new orders rose by 0.3% (-0.6% YoY). Durable goods orders decreased $5.2 billion or 2.1% to $242.2 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- rose by 0.2% (-1.2% YoY). New orders for nondurable goods increased $1.6 billion or 0.6% to $250.8 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 48% of the ground given up in the Great Recession. 

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Unfilled durable-goods orders decreased $4.9 billion or 0.4% to $1,158.7 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.67, down from 6.68 in October. 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.