July 2019 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 decreased $0.9 billion or 0.2% to $504.0 billion. Durable goods shipments decreased $2.9 billion or 1.1% to $253.9 billion led by transportation equipment. Meanwhile, nondurable goods shipments increased $2.0 billion or 0.8% to $250.1 billion, led by petroleum and coal products. Shipments of wood products dropped by 0.6% while paper was unchanged. 

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Inventories increased $1.2 billion or 0.2% to $696.5 billion. The inventories-to-shipments ratio was 1.38, unchanged from June. Inventories of durable goods increased $1.4 billion or 0.3% to $427.1 billion, led by transportation equipment. Nondurable goods inventories decreased $0.2 billion or 0.1% to $269.4 billion, led by chemical products. Inventories of wood products fell by 0.4%; paper: -0.6%. 

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New orders increased $6.9 billion or 1.4% to $500.3 billion. Excluding transportation, new orders rose by 0.3% (+0.8% YoY). Durable goods orders increased $5.0 billion or 2.0% to $250.2 billion, led by transportation equipment. New orders for non-defense capital goods excluding aircraft -- a proxy for business investment spending -- nudged up 0.2% (+0.6% YoY). New orders for nondurable goods increased $2.0 billion or 0.8% to $250.1 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. The recovery in real new orders is back to just 53% of the ground given up in the Great Recession. 

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Unfilled durable-goods orders increased $0.6 billion or virtually unchanged to $1,161.5 billion, led by fabricated metal products. The unfilled orders-to-shipments ratio was 6.67, up from 6.55 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 going 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.