econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 02 April 2015

February 2015 Manufacturing Mixed. Rolling Averages Remain in Contraction.

Written by Steven Hansen

US Census says manufacturing new orders improved. Our analysis agrees - and even the headline year-over-year growth declined from last month. The data has been soft for a half a year. Consider that this data is noisy - and the rolling averages (which include transport) remain in contraction territory. Unfilled orders are shrinking (year-over-year). Transport was soft this month.

3 Month Rolling Average - Unadjusted Manufacturing New Orders (blue line), Inflation Adjusted New Orders from the Unadjusted Data (red line)

US Census Headline:

  • The seasonally adjusted manufacturing new orders is up 0.2% (after last month's downwardly revised fall of 0.7%) month-over-month, and down 5.4% year-to-date.
  • Market expected month-over-month growth of -1.3% to +1.0% (consensus +0.0%) versus the reported +0.2%.
  • Manufacturing unfilled orders down 0.5% month-over-month, and up 8.4% year-to-date

Econintersect Analysis:

  • Unadjusted manufacturing new orders growth decelerated 0.5% month-over-month, and down 5.7% year-over-year
  • Unadjusted manufacturing new orders (but inflation adjusted) down 0.4% year-over-year - there is deflation in this sector.
  • Unadjusted manufacturing unfilled orders growth declined 1.3% month-over-month, and up 8.4% year-over-year
  • As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production was growth decelerated 0.2% month-over-month, and up 3.7% year-over-year.

Seasonally Adjusted Manufacturing Value of New Orders - All (red line, left axis), All except Defense (green line, left axis), All with Unfilled Orders (orange line, left axis), and all except transport (blue line, right axis)

The graph below shows sector growth year-over-year.

Year-over-Year Change Manufacturing New Orders - Unadjusted (blue line) and Inflation Adjusted (red line)

Now look at the manufacturing component of industrial production. While it is true that these are slightly different pulse points (inventory not accounted in shipments) - they should not have different trends for long periods of time.

Comparing Year-over-Year Change - Manufacturing Industrial Production (blue line) to Inflation Adjusted Manufacturers Shipments (green line)

Using employment to confirm manufacturing growth says this industry is growing year-over-year.

Employment Growth - Manufacturing (Seasonally Adjusted) - Total Employment (blue line) and Year-over-Year Change (red line)

The health of manufacturing is gauged by the growth of unfilled orders. The 3 month rolling average rate of growth is currently decelerating.

Unadjusted Unfilled Orders - Total Current Value (blue line, left axis) and Year-over-Year Change (red line, right axis)

A declining unfilled orders backlog could be a recessionary indication as unfilled orders generally decline in poor economic times. Keep the score on surveys, the following is a comparison of surveys to hard data - this Census data is the orange bars.

Comparing Surveys to Hard Data

/images/z survey1.png

Caveats on the Use of Manufacturing Sales

The data in this index continues to be revised up to 3 months following initial reporting. The revision usually is not significant enough to change the interpretation of each month's data in real time. Generally there are also annual revisions to this data series. The methodology used by US Census Bureau to seasonally adjust the data is not providing a realistic understanding of the month-to-month movements of the data. One reason is that US Census uses data over multiple years which includes the largest modern recession which likely distorts the analysis. Further, Econintersect believes there has been a fundamental shift in seasonality in the aftermath of the Great Recession of 2007 - the New Normal.Econintersect determines the month-over-month change by subtracting the current month's year-over-year change from the previous month's year-over-year change. This is the best of the bad options available to determine month-over-month trends - as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Depression distort historical data). This series is NOT inflation adjusted -Econintersect uses the PPI - subindex All Manufactured Goods. However, this is a rear view look at the economy. Manufacturing new orders or unfilled orders generally correlates to the economy - but it is not obvious in real time whether a recession is imminent. So in context to economy watchers - manufacturing by itself cannot be used as an economic gauge.

Adjusted Value - New Orders (blue line) and Unfilled Orders (red line)

The same issues are also evident if manufacturing backlog is used as a recession gauge.

Related Posts:

Old Analysis Blog

New Analysis Blog

All Manufacturing Posts All Manufacturing Posts


>>>>> Scroll down to view and make comments <<<<<<



Permanent link to most recent post on this topic

Click here for Historical Releases Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.







Econintersect Economic Releases


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
The Surprising Pevalence of Surprises in Export Specialisation
The Destruction of the Existing Workforce
News Blog
What We Read Today 24 January 2017
Best Ways To Protect Yourself Online
Richmond Fed Manufacturing Survey Improves In January 2017.
December 2016 Headline Existing Home Sales Hampered By Historically Low Inventory Levels
A New Order Of The Ages
How Bond Investors Were Fooled Twice
Infographic Of The Day: Crowdfunding
Early Headlines: Asia Stocks Mixed, Dollar Down, Oil Up, China May Replace US In TPP, Trump Freezes Feds' Hiring, Trump Files 'Secret' Transfer Papers, May To Visit China And More
January 23, 2017 Weather and Climate Report - NOAA Continues ENSO Neutral Denial
Documentary Of The Week: China's Wealth, Collapse, And Environmental Nightmare
Where Trump Stands On Twitter
Is This Really The Final Word On Whether Calorie-restricted Diets Make You Live Longer?
Electric Mobility Has A Long Way To Go
Investing Blog
Investing,com Weekly Wrap-up 24 January 2017
Netflix And Co. Surpass DVD And Blu-ray Sales
Opinion Blog
Bill Maher 2017 Season Premier
Trumping World Trade
Precious Metals Blog
A Slow Start For The Week Would Be Constructive For Gold
Live Markets
24Jan2017 Market Close: Wall Street Exuberant Closing With New Historic Highs, Trump Effect Still Working, Analysts Claim Another 5 Percent Higher Possible
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved