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 04 August 2015

June 2015 Manufacturing Improves But Still Far from Good

Written by Steven Hansen

US Census says manufacturing new orders improved. Our analysis agrees. Unadjusted unfilled orders' growth continues shrinking year-over-year. No matter how you cut the data, it is soft.

The big tailwind was civilian and defense aircraft.

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 1.8% (after la8st month's revised decline of 0.2%) month-over-month, and down 3.6% year-to-date.
  • Market expected month-over-month growth of +0.7% to +2.5% (consensus +1.7%) versus the reported +1.8%.
  • Manufacturing unfilled orders unchanged month-over-month, and up 4.6% year-over-year.

Econintersect Analysis:

  • Unadjusted manufacturing new orders growth accelerated 3.8 % month-over-month, and down 4.5 % year-over-year
  • Unadjusted manufacturing new orders (but inflation adjusted) up 0.3 % year-over-year - there is deflation in this sector.
  • Unadjusted manufacturing unfilled orders growth declined 1.1% month-over-month, and up 4.6% 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 0.1% month-over-month, and up 1.9% 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 - but growth is now slowing.

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. 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
Why Long-Run Theories of Profit and Accumulation Fall Short
Brexit - Who Wins and Loses
News Blog
Earnings And Economic Reports: Week Starting 24 April 2017
What Americans Think About Climate Change
What We Read Today 23 April 2017 - Special Public Edition
What We Read Today 23 April 2017
What Would A Civilization 1 Billion Years Older Than Us Be Like
Understanding The Downward Trend In Labor Income Shares
Why Renegotiating NAFTA Could Disrupt Supply Chains
Public Relations Nightmares
Catch Me If You Can
U.S. Consumer Debt Rises Overall, Housing Debt Drops
Infographic Of The Day: Graphene Is The Game-Changing Material Of The Future
Early Headlines: CB Bal. Sheets Still Growing, GOP Doing Too Much, May Threw Ulster Under Bus, French Election, China Vs. Pollution, Venzuela Gave To Trump Inaug., And More
NOAA and JAMSTEC Issue Seasonal Updates - Winter in Doubt
Investing Blog
The Week Ahead: Build That Wall!
How To Trade Earnings Announcements
Opinion Blog
What Does The Strong Q1 Growth Mean For China?
Marx, Orwell And State-Cartel Socialism
Precious Metals Blog
Three Gold Plays For The New Era Of Chaos
Live Markets
21Apr2017 Market Close: US Stocks Slipped Moderately, WTI Crude Slips On Renewed Concerns Of Increasing U.S. Production, Industrial Businesses' Cash Outflows Concern Investors
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