March 2020 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 March decreased $26.2 billion or 5.2% to $473.6 billion. Durable goods shipments decreased $11.8 billion or 4.7% to $240.4 billion, led by transportation equipment. Meanwhile, nondurable goods shipments decreased $14.4 billion or 5.8% to $233.2 billion, led by petroleum and coal products. Shipments of wood products fell by 0.4%; paper +1.2%. 

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Inventories decreased $5.8 billion or 0.8% to $693.5 billion. The inventories-to-shipments ratio was 1.46, up from 1.40 in February. Inventories of durable goods increased $2.8 billion or 0.6% to $437.4 billion, led by transportation equipment. Nondurable goods inventories decreased $8.6 billion or 3.2% to $256.1 billion, led by petroleum and coal products. Inventories of wood products was unchanged; paper: -0.3%. 

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New orders decreased $51.0 billion or 10.3% to $445.8 billion. Excluding transportation, new orders fell by 3.7% (-3.1% YoY). Durable goods orders decreased $36.6 billion or 14.7% to $212.6 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- decreased by 0.1% (-0.1% YoY). New orders for nondurable goods decreased $14.4 billion or 5.8% to $233.2 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 21% of the ground given up in the Great Recession. 

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Unfilled durable-goods orders decreased $23.6 billion or 2.0% to $1,134.9 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.57, down from 6.62 in February. 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.