August 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 August increased $1.4 billion or 0.3% to $481.3 billion. Durable goods shipments decreased $0.5 billion or 0.2% to $244.3 billion, led by transportation equipment. Meanwhile, nondurable goods shipments increased $1.9 billion or 0.8% to $236.9 billion, led by petroleum and coal products. Shipments of wood products rose by 2.9%; paper: +1.0%.

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Inventories increased $0.2 billion or virtually unchanged to $686.6 billion. The inventories-to-shipments ratio was 1.43, unchanged from July. Inventories of durable goods decreased $0.6 billion or 0.1% to $420.4 billion, led by machinery. Nondurable goods inventories increased $0.8 billion or 0.3% to $266.2 billion, led by chemical products. Inventories of wood products rose by 0.9%; paper: +0.2.

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New orders increased $3.2 billion or 0.7% to $470.1 billion. Excluding transportation, new orders rose by $2.9 billion or 0.7% (-4.9% YoY). Durable goods orders increased $1.3 billion or 0.5% to $233.2 billion, led by machinery. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- increased by $1.2 billion or 1.9% (+2.0% YoY). New orders for nondurable goods increased $1.9 billion or 0.8% to $236.9 billion.

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Unfilled durable-goods orders decreased $6.2 billion or 0.6% to $1,078.6 billion, led by transportation equipment. The unfilled orders-to-shipments ratio was 6.60, down from 6.69 in July. 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.