The Manufacturers’ Shipments, Inventories and Orders for November 2010 was released today. New orders overall increased 0.7%. Removing transportation (which includes aircraft) from the numbers, new orders increased 2.4%. This report is commonly referred to as Factory Orders in the press and refers to domestic manufactured goods, both durable and non-durable. Below is the monthly percent change, overall for durable goods new orders. This graph includes nondefense aircraft new orders.
Core capital goods increased 2.6%. Below is the graph for core capital goods.
Here is the U.S. Chamber of Commerce's definition of capital goods:
The Capital Goods Industries include Nondefense : small arms and ordnance; farm machinery and equipment; construction machinery; mining, oil, and gas field machinery; industrial machinery; vending, laundry, and other machinery; photographic equipment; metalworking machinery; turbines and generators; other power transmission equipment; pumps and compressors; material handling equipment; all other machinery; electronic computers; computer storage devices; other computer peripheral equipment; communications equipment; search and navigation equipment; electromedical, measuring, and control instruments; electrical equipment; other electrical equipment, appliances, and components; heavy duty trucks; aircraft; railroad rolling stock; ships and boats; office and institutional furniture; andmedical equipment and supplies.
What the press calls core capital goods is actually capital goods minus aircraft and defense. Capital goods are durable goods as well. Capital goods are also called the means of production and this is the stuff used to make stuff, so having a jump like this is some refreshing good news.
Capital goods new orders decreased -4.4%, but this is due aircraft. Nondefense aircraft dropped a whopping -50.6% in new orders. Remember air-o-planes are extremely volatile, (ships and boats increased 34.3% as an example), these big ticket items are simply not bought every day. Defense capital goods new orders increased an eye-popping 17.5%.
Below is the breakdown in manufacturing data change, overall from last month.
- New orders: +0.7%
- Durable: -0.3%
- Non-Durable: +1.7%
- Shipments: +0.8%
- Durable: -0.1%
- Non-Durable: +1.7%
- Unfilled orders: 0.6%
- Inventories: +0.8%
- Durable: +0.6%
- Non-Durable: +0.9%
Both the increases in shipments and inventories over Q4 2010 bode well for a stronger Q4 GDP number. Of course the real problem is jobs and good numbers in manufacturing without corresponding hiring is particularly concerning.
Ratios: The unfilled orders to shipments ratio is 5.75, which is unchanged from last month. The inventory to shipment ratio is also unchanged, at 1.28.
New orders for October were revised to a -0.7% change from September.
For more details here is the website for manufacturing data.