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%.
Mike “Mish” Shedlock
Auto makers and dealers are sure NOT cutting prices especially on used aka Pre-owned. A 10 yr old Toyota Corolla with less than 50,000 miles is still around$10,000 plus 6.25% sales tax or 8.875% sales tax in NYC plus all the DMV fees and annual State inspection.
New and used cars tend to move in opposite directions. When new cars are selling, that means people are putting their prior cars into the used car market, increasing the supply of used cars, pushing down the price. If they buy used instead, used car prices tend to be higher (and auto repair shops and parts stores do better).
If you see hiring slow down significantly, you may see a -250k loss in jobs because of layoff churn that always happens in corporate America. That will be a giant sell signal.