February 2016 Manufacturing New Orders Declined?

US Census says manufacturing new orders declined. Our analysis says sales improved and is now in expansion. Unadjusted unfilled orders’ growth remains in CONTRACTION year-over-yea.

Part of the reason for the poor growth is that the data is not inflation adjusted (deflation is occuring in this sector) – however, all the gains this month are wiped away as deflation lessened. Civilian and defence aircraft was the major tailwind – and most of the data was soft..

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 down 1.7 % month-over-month, and down 1.7 % year-to-date (last month was down 4.0 % year-to-date)..

Market expected (from Bloomberg) month-over-month growth of -2.1 % to -1.1 % (consensus -1.6 %) versus the reported -1.7 %.

Manufacturing unfilled orders down 0.3 % month-over-month, and down 1.6 % year-over-year.

Econintersect Analysis:

Unadjusted manufacturing new orders growth accelerated 3.6 % month-over-month, and up 0.1 % year-over-year

Unadjusted manufacturing new orders (but inflation adjusted) up 3.7 % year-over-year – there is deflation in this sector.

Unadjusted manufacturing unfilled orders growth accelerated 0.1 % month-over-month, and down 1.6 % year-over-year

As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth accelerated0.1 % month-over-month, and up 1.2 % 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)