Manufacturers' New Orders Significantly Miss Estimates Second Month

Due to government shutdown delays the Census Bureau is just now releasing it report on Manufacturers' Shipments, Inventories, and Orders for December 2018.

New orders for manufactured goods in December, up following two consecutive monthly decreases, increased $0.3 billion or 0.1 percent to $499.9 billion, the U.S. Census Bureau reported today. This followed a 0.5 percent November decrease. Shipments, down three consecutive months, decreased $0.9 billion or 0.2 percent to $504.9 billion. This followed a 0.5 percent November decrease. Unfilled orders, also down three consecutive months, decreased $0.9 billion or 0.1 percent to $1,180.3 billion. This followed a 0.2 percent November decrease. The unfilled orders‐to‐shipments ratio was 6.55, down from 6.58 in November. Inventories, down two consecutive months, decreased $0.1 billion or virtually unchanged to $681.5 billion. This followed a 0.1 percent November decrease. The inventories‐to‐shipments ratio was 1.35, unchanged from November.

Key Items

• Excluding transportation, new orders fell 0.6%.
• Orders for non-defense aircraft and parts rose 28.4% while defense aircraft and parts fell 30.5%.
• Motor vehicles and parts orders rose 2.4%.
• Core capital goods, defined as non-defense capital goods excluding aircraft fell a sharp 1.0%. Last month core capital goods order fell 1.1%.
• Consumer goods also fell a sharp 1.0%. Last month, consumer goods orders fell 2.4%.

Core capital goods are a measure of future manufacturing expansion or contraction. The decline is troubling.

I suspect a huge auto inventory problem looms with autos.

Transportation orders skewed this report. It's a lot worse than it appears at first glance.

Finally, note that Inventories Soar in December

Wholesales inventories rose 1.1% and retail inventories rose 0.9%.