October 2018 Manufacturing New Orders Decline

US Census says manufacturing new orders declined. Our analysis shows the rolling averages declined.

Analyst Opinion of Census Manufacturing Sales

According to the seasonally adjusted data, it was civilian and military aircraft which was the major contributor to the decline. The data in this series is noisy so I would rely on the unadjusted 3 month rolling averages which declined.

Remember the headline numbers are not inflation adjusted - and inflation is a big deal in this sector.

Backlog of orders shows no growth if one considering inflation.

US Census Headline:

  • The seasonally adjusted manufacturing new orders was down 2.1 % month-over-month.
  • Market expected (from Econoday) month-over-month growth of -2.2 % to -1.9 % (consensus -2.0 %).
  • Manufacturing unfilled orders was down 0.1 % month-over-month.

Econintersect Analysis:

  • Unadjusted manufacturing new orders growth accelerated 1.1 % month-over-month, and up 7.8 % year-over-year.
  • Unadjusted manufacturing new orders (but inflation adjusted) up 2.7 % year-over-year.
  • Three month rolling new order rolling averages decelerated 0.8 % month-over-month, and is up 8.3 % year-over-year.
  • Unadjusted manufacturing unfilled orders growth decelerated 0.2 % month-over-month, and up 4.8 % year-over-year [note inflation is running around 5 % in this sector which means backlog is really not growing]
  • As a comparison to the inflation-adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth decelerated 1.0 % month-over-month, and up 3.0 % year-over-year.

Seasonally Adjusted Manufacturing Value of New Orders - All (red line, left axis), All except Defense (green line, left axis), All with Unfilled Orders (orange line, left axis), and all except transport (blue line, right axis)

The graph below shows sector growth year-over-year.

Year-over-Year Change Manufacturing New Orders - Unadjusted (blue line) and Inflation Adjusted (red line)

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