June 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 June increased $40.7 billion or 9.8% to $457.3 billion. Durable goods shipments increased $29.8 billion or 15.1% to $227.3 billion, led by transportation equipment. Meanwhile, nondurable goods shipments increased $10.9 billion or 5.0% to $230.0 billion, led by petroleum and coal products. Shipments of wood products rose by 2.8%; paper: -0.5%.

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Inventories increased $4.0 billion or 0.6% to $690.9 billion. The inventories-to-shipments ratio was 1.51, down from 1.65 in May. Inventories of durable goods increased $0.2 billion or virtually unchanged to $425.0 billion, led by transportation equipment. Nondurable goods inventories increased $3.8 billion or 1.5% to $265.9 billion, led by petroleum and coal products. Inventories of wood products rose by 0.4%; paper: +0.4%.

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New orders increased $25.5 billion or 6.2% to $437.2 billion. Excluding transportation, new orders rose by 16.2 billion or 4.4% (-4.8% YoY). Durable goods orders increased $14.6 billion or 7.6% to $207.2 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- increased by $2.1 billion or 3.4% (-0.7% YoY). New orders for nondurable goods increased $10.9 billion or 5.0% to $230.0 billion.

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Unfilled durable-goods orders decreased $15.3 billion or 1.4% to $1,092.5 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 7.01, down from 7.56 in May. 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.