May 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 May increased $12.5 billion or 3.1% to $417.0 billion. Durable goods shipments increased $8.3 billion or 4.4% to $198.0 billion, led by transportation equipment. Meanwhile, nondurable goods shipments increased $4.2 billion or 2.0% to $219.0 billion, led by petroleum and coal products. Shipments of wood products rose by 4.0%; paper: -0.2%. 

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Inventories increased $1.1 billion or 0.2% to $687.0 billion. The inventories-to-shipments ratio was 1.65, down from 1.70 in April. Inventories of durable goods increased $0.3 billion or 0.1% to $425.0 billion, led by transportation equipment. Nondurable goods inventories increased $0.8 billion or 0.3% to $262.0 billion, led by petroleum and coal products. Inventories of wood products fell by 1.5 %; paper: +0.9%. 

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New orders increased $30.5 billion or 8.0% to $412.8 billion. Excluding transportation, new orders rose by 2.6% (-13.7% YoY). Durable goods orders increased $26.3 billion or 15.7% to $193.8 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- increased by 1.6% (-7.3% YoY). New orders for nondurable goods increased $4.2 billion or 2.0% to $219.0 billion. 

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Unfilled durable-goods orders increased $0.7 billion or 0.1% to $1,108.5 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 7.53, down from 7.70 in April. 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.