July 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 July increased $21.3 billion or 4.6% to $479.5 billion. Durable goods shipments increased $17.1 billion or 7.5% to $244.6 billion, led by transportation equipment. Meanwhile, nondurable goods shipments increased $4.2 billion or 1.8% to $235.0 billion, led by petroleum and coal products. Shipments of wood products rose by 5.9%; paper: +1.4%.

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Inventories decreased $3.1 billion or 0.5% to $687.2 billion. The inventories-to-shipments ratio was 1.43, down from 1.51 in June. Inventories of durable goods decreased $2.7 billion or 0.6% to $421.8 billion, led by fabricated metal products. Nondurable goods inventories decreased $0.5 billion or 0.2% to $265.4 billion, led by chemical products. Inventories of wood products fell by 0.3%; paper: -0.8.

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New orders increased $27.8 billion or 6.4% to $466.1 billion. Excluding transportation, new orders rose by 8.2 billion or 2.1% (-5.2% YoY). Durable goods orders increased $23.7 billion or 11.4% to $231.1 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- increased by $1.2 billion or 1.9% (+0.1% YoY). New orders for nondurable goods increased $4.2 billion or 1.8% to $235.0 billion.

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Unfilled durable-goods orders decreased $8.3 billion or 0.8% to $1,084.3 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.70, down from 7.01 in June. 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.