The Extremely Uneven Manufacturing Recovery in Pictures

Mish

The recovery in industrial production 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 and Manufacturing Component 1985 to 2020-08

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.

For more details and charts, please see Huge Miss in Industrial Production Output vs Expectations.

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 Total Through July 2020

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 durable goods 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. 

For details and discussion, please see How Long Will It Take For the Airline Industry to Recover?

Mish

Comments (11)
No. 1-6
Webej
Webej

Aircraft ... cannot get back up

Worst kind of problem for aircraft.

PecuniaNonOlet
PecuniaNonOlet

I am bewildered by auto recovery. Who is buying cars? Most people I know still working from home, unless RV sales are in there. I know people buying those.

numike
numike

Trump: "The economy does better under the Democrats than the Republicans" https://www.youtube.com/watch?time_continue=2&v=fn3cTT6O1I4&feature=emb_logo

Felix_Mish
Felix_Mish

@Mish - Great chart at the top of this posting!

Something to keep in mind for the farther future: Any outfit in the transportation business has fiber optics as a dangerous competitor.

Watch the world of humans separate out like the leopard's spots.

And watch for a split between how humans interact with those with whom they can touch and those who are separated by fiber optics. The current tone of on-line discourse tells us the road ahead will be bumpy.

Lance Manly
Lance Manly

Autos are going to have problems with fleet sales, the rental companies are in the toilet.

Zardoz
Zardoz

Maybe I can dodge the still artificially inflated housing market by making a home in a fire sale jumbo jet.


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