October 2015 Manufacturing Improves But Still Not Good

US Census says manufacturing new orders improved. Our analysis says sales did improve but are still not good. Unadjusted unfilled orders’ growth remains in CONTRACTION year-over-year.

Part of the reason for the bad data is that the data is not inflation adjusted (deflation is occurring in this sector) – but it does not explain all the decline. Most of the data was soft, but civilian aircraft was the major tailwind.

3 Month Rolling Average – Unadjusted Manufacturing New Orders (blue line), Inflation Adjusted New Orders from the Unadjusted Data (red line)

US Census Headline:

The seasonally adjusted manufacturing new orders is up 1.5 % month-over-month, and down 7.1 % year-to-date (last month was down 7.2 % year-to-date)..

Market expected month-over-month growth of 0.5 % to 1.8 % (consensus +1.4 %) versus the reported 1.5 %.

Manufacturing unfilled orders up 0.3 % month-over-month, and down 2.1 % year-over-year.

Econintersect Analysis:

Unadjusted manufacturing new orders growth accelerated 1.3 % month-over-month, and down 5.7 % year-over-year

Unadjusted manufacturing new orders (but inflation adjusted) unchanged year-over-year – there is deflation in this sector.

Unadjusted manufacturing unfilled orders growth unchanged month-over-month, and down 2.1 % year-over-year

As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production was growth accelerated 0.4 % month-over-month, and up 1.9 % 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)