The US Census Bureau report on Manufacturers' Shipments, Inventories, and Orders shows:
- New orders for manufactured goods in August decreased $8.2 billion or 1.7 percent to $473.0 billion.
- Shipments, down four of the last five months, decreased $3.2 billion or 0.7 percent to $480.1 billion. This followed a 0.2 percent July decrease.
- Unfilled orders, down following two consecutive monthly increases, decreased $2.4 billion or 0.2 percent to $1,195.0 billion.
- Inventories, down two consecutive months, decreased $1.6 billion or 0.3 percent to $648.4 billion. This followed a 0.3 percent July decrease.
| Manufactured Goods New Orders | |||
|---|---|---|---|
| Grouping | July-August | June-July | May-June |
| All | -1.7% | 0.2% | 2.2% |
| Excluding Transportation | -0.8% | -0.7% | 0.6% |
| Excluding Defense | -1.2% | -0.3% | 2.2% |
| With Unfilled Orders | -2.6% | 1.6% | 1.6% |
| Durable Goods Orders Only | -2.3% | 1.9% | 4.1% |
The last two months have been a disaster, especially the ex-transportation numbers. The June-July overall reading of 0.2% was revised lower from the initial reading of 0.4% last month.
Consensus Estimates
The 1.7% decrease came in under the Bloomberg Consensus Estimate of -1.3%.
The export-hit factory sector is in the headlines with orders for August down 1.7 percent and under the Econoday consensus for minus 1.3 percent. Orders for non-durable goods, pulled down by price weakness for petroleum and coal products, fell 1.1 percent on top of July's 1.4 percent decline. Orders for durable goods, initially released last week, are revised down to minus 2.3 percent vs an initial decline of 2.0 percent. And swings in aircraft are not distorting the picture as the ex-transportation reading is down 0.8 percent in August following July's 0.7 percent decline.Autos Once Again
Capital goods data show a step back from two months of prior strength. Orders for core capital goods (nondefense ex-aircraft) fell 0.8 percent in August with shipments for this reading down 0.4 percent.
Motor vehicle orders fell 0.4 percent but are very likely to rebound in the next report given the sharp gains underway for vehicle sales. Pluses include another gain, despite the capital goods weakness, for machinery orders and also another gain for energy equipment which has been bouncing back. Furniture has also been strong.
But the bulk of today's report shows weakness including a 0.2 percent decline for unfilled orders and another dip for total shipments, down a steep 0.7 percent following July's 0.2 percent decline. Inventories fell 0.3 percent but were outmatched by the decline in shipments with the inventory-to-shipment ratio moving one notch higher to 1.35.
Unwanted inventories are a question right now, especially given what looks to have been a very poor September for the factory sector. Global weakening, as underscored by the FOMC, is a wildcard for the economy and the nation's factories are at the front line.
Bloomberg noted strong auto sales and also cautioned about "unwanted inventories".
Actually, those two thoughts need to go together in a way Bloomberg did not mention. Auto sales are counted when shipped to dealers. If cars are sitting on dealer lots, the auto party is over. We will not find out for a while.
Durable Goods New Orders
Durable Goods New Orders Excluding Transportation
These numbers will take a few ticks off the Atlanta Fed GDPNow Forecast currently sitting at 0.9% for the third quarter.
For analysis of today's jobs report, please see Payroll Disaster: Establishment Survey +142K Jobs, Employment -236K; Labor Force -350K; 59K Downward Revisions.
Mike "Mish" Shedlock
