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 April 2016

February 2016 Manufacturing New Orders Declined?

Written by Steven Hansen

US Census says manufacturing new orders declined. Our analysis says sales improved and is now in expansion. Unadjusted unfilled orders' growth remains in CONTRACTION year-over-yea.

Part of the reason for the poor growth is that the data is not inflation adjusted (deflation is occuring in this sector) - however, all the gains this month are wiped away as deflation lessened. Civilian and defence aircraft was the major tailwind - and most of the data was soft..

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 down 1.7 % month-over-month, and down 1.7 % year-to-date (last month was down 4.0 % year-to-date)..
  • Market expected (from Bloomberg) month-over-month growth of -2.1 % to -1.1 % (consensus -1.6 %) versus the reported -1.7 %.
  • Manufacturing unfilled orders down 0.3 % month-over-month, and down 1.6 % year-over-year.

Econintersect Analysis:

  • Unadjusted manufacturing new orders growth accelerated 3.6 % month-over-month, and up 0.1 % year-over-year
  • Unadjusted manufacturing new orders (but inflation adjusted) up 3.7 % year-over-year - there is deflation in this sector.
  • Unadjusted manufacturing unfilled orders growth accelerated 0.1 % month-over-month, and down 1.6 % year-over-year
  • As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth accelerated 0.1 % month-over-month, and up 1.2 % 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 accelerating but negative year-over-year.

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.



>>>>> 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
Reinhard Selten: Pioneering Analyst of Rationality and Human Behaviour
2015 Household Income Up 5.2% Is Just Spin
News Blog
The Dollar - Gold Relationship
Almost Half Of Rape Cases End Without A Conviction
People With 'Obesity Gene' Can Still Lose Weight
The World's Most Generous Countries In 2016
What We Read Today 24 September 2016
Is The Butterfly Effect Real
August 2016 Philly Fed Coincident Index Shows Continuing Slowing Of Economic Rate of Growth
Global Bonds: Why Our Analyst Says Things Just Got "Monumental"
Trends In Expenditures By US Colleges And Universities, 1987-2013
Why Firms In Developing Nations Don't Grow As Fast
Infographic Of The Day: Upcycling Your Rug
Early Headlines: Is Secular Middle East Possible?, Why Cruz Flipped, Bubble Mortgage Crisis Lives On, Current US Housing Cycle, US Abandons Syria Truce, Brazil's New Pres. Investigated And More
The Most Costly Man-Made Disaster
Investing Blog
How To Protect Your Money Against Negative Interest Rates
Technical Thoughts: How Much Risk?
Opinion Blog
There's No Wall Between The Fed And Banco De Mexico
The Setting Sun: Japan Faces Monetary Exhaustion
Precious Metals Blog
War On Cash Turns To $20, $50, And $100 Bills
Live Markets
23Sep2016 Market Close: US Indexes Close Lower As Crude Prices Slip, Fed Lowers Economic Growth Prospects, Indicators Melting Into Bearish Territory
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



Crowdfunding ....






























 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 - 2016 Econintersect LLC - all rights reserved