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Adjusting For Inflation Is Removing Most Growth In Manufacturing New Orders

US Census says manufacturing new orders improved. Our analysis is that inflation eats away any gains. The rolling averages improved.

According to the seasonally adjusted data, it was civilian aircraft that caused the increase. The data in this series is noisy so I would rely on the unadjusted 3 month rolling averages which was improved..

Note that when one inflation adjusts, there is a decline both month-over-month and year-over-year in manufacturing.

Backlog improved - but remains in contraction year-over-year.

US Census Headline:

  • The seasonally adjusted manufacturing new orders is up 1.0 % month-over-month, and up 4.6 % year-to-date.
  • Market expected (from Bloomberg / Econoday) month-over-month growth of 0.4 % to 1.1 % (consensus +1.0 %).
  • Manufacturing unfilled orders down 0.0 % month-over-month, and down 1 4% year-over-year.

Econintersect Analysis:

  • Unadjusted manufacturing new orders growth decelerated.2 2 % month-over-month, and up 3.5 % year-over-year.
  • Unadjusted manufacturing new orders (but inflation adjusted) down 0.5 % year-over-year.
  • Three month rolling new order rolling averages was up 0.7% month-over-month, and is up 3.8 % year-over-year.
  • Unadjusted manufacturing unfilled orders growth accelerated 0.6 % month-over-month, and down 1.4 % year-over-year
  • As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth was up 0.2 % month-over-month, and up 0.5 % 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)

There is a question whether inflation is taking hold in the short to medium term - but for now one must always think of the impact of inflation on the data we view.

Other Economic News this Week:

The Econintersect Economic Index for April 2017 improvement trend continues although the value remains in the territory of weak growth. The index remains below the median levels seen since the end of the Great Recession. Six-month employment growth forecast indicates modest improvement in the rate of growth.

Bankruptcies this Week from Privately-held Angelica (f/k/a Angelica Healthcare and Angelica Image Apparel), Privately-held Payless (f/k/a Collective Brands)

Please visit our landing page for all of our analysis this past week.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.