December 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 December increased $2.3 billion or 0.5% to $504.1 billion. Durable goods shipments decreased $0.5 billion or 0.2% to $250.3 billion, led by transportation equipment. Meanwhile, nondurable goods shipments increased $2.8 billion or 1.1% to $253.8 billion, led by petroleum and coal products. Shipments of wood products fell by 0.5%; paper -0.4%. 

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Inventories increased $3.5 billion or 0.5% to $704.9 billion. The inventories-to-shipments ratio was 1.40, unchanged from November. Inventories of durable goods increased $2.1 billion or 0.5% to $435.9 billion, led by transportation equipment. Nondurable goods inventories increased $1.4 billion or 0.5% to $269.0 billion, led by petroleum and coal products. Inventories of wood products expanded by 0.5%; paper: +0.2%. 

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New orders increased $8.6 billion or 1.8% to $499.3 billion. Excluding transportation, new orders rose by 0.6% (+2.6% YoY). Durable goods orders increased $5.9 billion or 2.4% to $245.6 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- fell by 0.8% (+1.8% YoY). New orders for nondurable goods increased $2.8 billion or 1.1% to $253.8 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 51% of the ground given up in the Great Recession. 

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Unfilled durable-goods orders decreased $0.6 billion or virtually unchanged to $1,156.2 billion, led by machinery. The unfilled orders-to-shipments ratio was 6.65, down from 6.66 in November. 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.