December 2015 Manufacturing Again Declines

US Census says manufacturing new orders declined. Our analysis says sales did decline. Unadjusted unfilled orders’ growth remains in CONTRACTION year-over-year – but this is due to deflation in this sector..

Part of the reason for the poor growth is that the data is not inflation adjusted (deflation is occuring in this sector). Civilian and defence aircraft was the major headwind – but 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 2.9 % month-over-month, and down 6.6 % year-to-date (last month was down 6.8 % year-to-date)..

Market expected (from Bloomberg) month-over-month growth of -3.7 % to 0.2 % (consensus -2.8 %) versus the reported -2.9 %.

Manufacturing unfilled orders up 0.5 % month-over-month, and down 2.0 % year-over-year.

Econintersect Analysis:

Unadjusted manufacturing new orders growth decelerated 0.7 % month-over-month, and down 4.3 % year-over-year

Unadjusted manufacturing new orders (but inflation adjusted) up 0.0 % year-over-year – there is deflation in this sector.

Unadjusted manufacturing unfilled orders growth accelerated 0.3 % month-over-month, and down 2.0 % year-over-year

As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth decelerated0.1 % month-over-month, and up 0.7 % 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)