The headlines say manufacturing sales in May 2011 are up 0.8% month-over-month. Although this is technically correct, manufacturing remains within a less good channel after adjusting for price inflation.
New orders for manufactured goods in May, up two of the last three months, increased $3.5 billion or 0.8 percent to $445.3 billion, the U.S. Census Bureau reported today. This followed a 0.9 percent April decrease. Excluding transportation, new orders increased 0.2 percent. Shipments, up eight of the last nine months, increased $0.4 billion or 0.1 percent to $443.9 billion. This followed a 0.4 percent April decrease. Unfilled orders, up thirteen of the last fourteen months, increased $7.7 billion or 0.9 percent to $860.9 billion. This followed a 0.6 percent April increase. The unfilled orders-to-shipments ratio was 6.12, up from 6.11 in April. Inventories, up nineteen of the last twenty months, increased $4.5 billion or 0.8 percent to $593.0 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 1.5 percent April increase. The inventories-to-shipments ratio was 1.34, up from 1.33 in April.
The health of manufacturing is gauged by the growth of unfilled orders. This month our analysis adjusted the order value to inflation – to see if the number of “widgets” under order was actually increasing.
Surprise! Unfilled orders actually only grew in November and December of 2010. During 2011, the number of widgets on order (but not shipped) has been declining. This tells that there is too much capacity – and too many employees.
Manufacturing is no longer a green shoot.
Durable Goods Says the Economy Was Better in May 2011 by Steven Hansen
Industrial Production Downtrend Continues in May 2011 by Steven Hansen
Empire State Manufacturing Survey Is Pretty Bad by Steven Hansen
April 2011 Manufacturing Data is Really Bad by Steven Hansen
Terrible Data Week: Is Inflation the Cause? by Steven Hansen
Philly Fed Business Outlook “Less Good” in May 2011 by Steven Hansen
April 2010 Economic Forecast: Likely at Sub-Cycle Peak by Steven Hansen
Consumers Come to Terms with Frugality by Rick Davis
Business Sales Up Strongly in March 2011 by Steven Hansen