April 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 April decreased $63.6 billion or 13.5% to $406.8 billion. Durable goods shipments decreased $42.4 billion or 18.2% to $191.2 billion, led by transportation equipment. Meanwhile, nondurable goods shipments decreased $21.2 billion or 9.0% to $215.6 billion, led by petroleum and coal products. Shipments of wood products fell by 9.0%; paper: -0.9%. 

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Inventories decreased $2.6 billion or 0.4% to $686.5 billion. The inventories-to-shipments ratio was 1.69, up from 1.46 in March. Inventories of durable goods increased $0.6 billion or 0.2% to $425.3 billion, led by transportation equipment. Nondurable goods inventories decreased $3.2 billion or 1.2% to $261.2 billion, led by petroleum and coal products. Inventories of wood products edged down by 0.1%; paper: +1.1%. 

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New orders decreased $57.5 billion or 13.0% to $384.3 billion. Excluding transportation, new orders fell by 8.5% (-13.7% YoY). Durable goods orders decreased $36.3 billion or 17.7% to $168.7 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- decreased by 6.1% (-7.8% YoY). New orders for nondurable goods decreased $21.2 billion or 9.0% to $215.6 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. Real new orders have now fallen nearly 11% below the trough of the Great Recession. 

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Unfilled durable-goods orders decreased $17.6 billion or 1.6% to $1,107.6 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 7.62, up from 6.70 in March. 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.