In October 2010, US Census reported manufacturing new orders down – and Econintersect’s analysis (click here) reported sales flat. This month (November 2010), US Census reported manufacturing new orders up – and Econintersect’s analysis still maintains sales are flat. First the headlines in part:
New orders for manufactured goods in November, up four of the last five months, increased $3.2 billion or 0.7 percent to $423.8 billion, the U.S. Census Bureau reported today. This followed a 0.7 percent October decrease. Excluding transportation, new orders increased 2.4 percent.
Shipments, up three consecutive months, increased $3.4 billion or 0.8 percent to $424.5 billion. This followed a 0.4 percent October increase. Unfilled orders, up ten of the last eleven months, increased $4.8 billion or 0.6 percent to $826.9 billion. This followed a 0.7 percent October increase. The unfilled orders-to-shipments ratio was unchanged at 5.75. Inventories, also up ten of the last eleven months, increased $4.1 billion or 0.8 percent to $543.8 billion.
The inventories-to-shipments ratio was unchanged at 1.28.
Unfilled orders for manufactured durable goods in November, up ten of the last eleven months, increased $4.8 billion or 0.6 percent to $826.9 billion, revised from the previously published 0.4 percent increase. This followed a 0.7 percent October increase.
Inventories of manufactured durable goods in November, up eleven consecutive months, increased $2.0 billion or 0.6 percent to $319.2 billion, unchanged from the previously published increase. This followed a 0.6 percent October increase.
Econintersect uses unadjusted data which is different than the seasonally adjusted data used in the headlines.
Whether you consider that there has been an improvement in the November new orders depends on what year you compare. Stepping back from the data, you will notice the large YoY increases in 2010 in March, April and May. Then with minor variance, the YoY increases for the rest of the year has remained constant.
Econintersect believes this YoY increase is the New Normal constant for new orders which is approximately $40 billion per month for new orders. Econintersect views 2009 as a recession year as the real economy did not start expanding until year end – and this expansion is approximately $40 billion a month in manufacturing.
The good news is manufacturing backlog is developing an upward trend. This is telling us that capacity is matched to the economic conditions.
Manufacturers inventories are continuing to drift upwards – now 6.8% higher YoY against a 12% YoY new order increase. Inventory growth appears in line with business growth.
Overall, Econintersect believes this data is showing a manufacturing sector which is stable – but not showing any significant growth trend in November 2010.
Manufacturing is Stronger than the 0.9% Decline Reported in October by Steven Hansen