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Economy in Brief

U.S. Factory Shipments & Inventories Continue To Throw Off Mixed Signals
by Carol Stone   December 03, 2010

As indicated by the advance report on durable goods industries last week, the total manufacturing sector appears to have lost some momentum in the last few months through October.  Shipments of manufactured goods rose just 0.3% in October (+6.8% y/y) and new orders fell 0.9% (+8.9% y/y).  Revisions to durable goods previously reported were mild; shipments are still seen with a 0.9% decline in the month and orders were shaved to a 3.4% decrease from 3.3% in the advance release.  Nondurable goods shipments rose 1.5% in October and were 7.7% above year-ago amounts; while this looks good, it compares to gains back during the spring at about twice that year-to-year rate. 

Factory inventories are growing, with October's up 0.9% (+5.8% from a year ago).  The inventory/shipments ratio ticked up in October to 1.28 from 1.27 in September; it is about the same as a year ago, but higher than last winter when shipments seemed stronger.  Inventories at all three stages of fabrication are rising; the increases in materials & supplies, +4.8% y/y, and work-in-process, +7.7% y/y, suggest that factory managers may believe their demand is moving ahead, so they should rebuild stocks.  But the increase in finished goods, +5.1% y/y, could be associated with the recent moderation in shipments, a less desirable development.

Thus, while there are some signs of improving activity, these continue to look quite uneven and tenuous.

The Manufacturers' Shipments, Inventories and Orders (MSIO) data are available in Haver's USECON database.

U.S. Manufacturing Sector (NAICS, %) Oct Sept Aug Y/Y 2009 2008 2007
Inventories 0.9 1.1 0.4 5.8 -8.8 -0.8 7.6
New Orders -0.9 3.0 0.0 8.9 -17.8 -1.0 8.7
Shipments 0.3 0.7 -0.2 6.8 -15.6 2.3 6.4
Unfilled Orders 0.6 1.3 0.2 1.8 -11.1 2.8 31.2
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