New Orders for Manufactured Goods Down More than Expected, Inventories Up 18 of 19 Months, Highest Since 1992

The Department of Commerce report on Manufacturer's Shipments, Inventories, and Orders released today shows new orders for manufactured goods were down following three consecutive increases, while inventories were up for the 18th time in 19 months.

Report Highlights

• New orders for manufactured goods in May, down following three consecutive monthly increases, decreased $2.6 billion or 0.5 percent to $497.7 billion.
• Excluding transportation, new orders decreased 0.1 percent.
• Shipments, up four consecutive months, increased $0.3 billion or 0.1 percent to $498.3 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.4 percent April increase.
• Unfilled orders, up thirteen of the last fourteen months, increased $6.7 billion or 0.6 percent to $1,087.4 billion. This was also at the highest level since the series was first published on a NAICS basis and followed a 0.9 percent April increase.
• Inventories, up eighteen of the last nineteen months, increased $5.0 billion or 0.8 percent to $651.5 billion. This was also at the highest level since the series was first published on a NAICS basis and followed a 0.5 percent April increase. 
• The inventories-to-shipments ratio was 1.31, up from 1.30 in April.
• Inventories of manufactured durable goods in May, up thirteen of the last fourteen months, increased $3.6 billion or 0.9 percent to $397.5 billion, revised from the previously published 1.0 percent increase. This was at the highest level since the series was first published on a NAICS basis and followed a 0.2 percent April increase.

Stage Set for Huge Slowdown

Inventories, shipments, and unfilled orders are highest levels ever on a NAICS basis that dates back to 1992.

The North American Industry Classification System (NAICS, pronounced Nakes) was developed as the standard for use by Federal statistical agencies in classifying business establishments for the collection, analysis, and publication of statistical data related to the business economy of the U.S. NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the old Standard Industrial Classification (SIC) system. It was also developed in cooperation with the statistical agencies of Canada and Mexico to establish a 3-country standard that allows for a high level of comparability in business statistics among the three countries.

The stage is set for one heck of a slowdown when customer demand sinks.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com