Uneven Manufacturing Recovery In Pictures

The recovery in has slowed. A sector outlook shows one huge problem.

One Huge Problem

Auto production took the steepest hit but it has since recovered.

Aircraft and aircraft parts production fell off a cliff and cannot get back up.

Industrial Production Components 1985-Present

Industrial Production Components 1985-Present

Industrial Production Components 1985-Present

Cyclical Industries

The long-term chart shows the hugely cyclical nature of the aircraft industry, often unrelated to recessions.

Recoveries for autos and aircraft can be lengthy. But in this case, auto production recovered quickly based on the Fed’s Industrial Production report this morning.

Index Levels Don’t Tell the Full Story

Neither Index levels nor percentage moves tell the full story. The pertinent numbers are the actual values of production components.

Manufacturers’ Value of New Orders

Manufacturers' Value of New Orders

Manufacturers’ Value of New Orders

The above image is the right-hand portion of Table 2 in the Monthly Report On Manufacturers’ Shipments, Inventories and Orders for July 2020.

Year-to-Date Synopsis Through July

  • Manufacturing down $329.782 billion. Of which durable goods were down $204.551 billion and non-durable goods were down $125.231 billion.
  • Transportation was down $167,861 billion. Aircraft accounted for $88.505 billion of the loss. The negative year-to-date number is order cancellations.
  • $88.505 billion is is over half of the transportation loss and 43% of the loss.

One Huge Problem and Lots of Small Ones

Aircraft is the huge problem but nondurable goods, primary metals, and machinery are more than big enough to matter.

How Long Will It Take For the Airline Industry to Recover?

It’s possible autos have stabilized but I do expect another swoon down as the recovery stalls.

Aircraft is another matter.

Original Post

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

(Visited 2 times, 1 visits today)