Manufacturers' Shipments, Inventories and Orders
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Manufacturers' Shipments, Inventories, and Orders
The Manufacturers' Shipments, Inventories, and Orders (M3) Survey is a key economic indicator released monthly by the U.S. Census Bureau. It provides a broad-based, high-level look at the health of the domestic manufacturing sector by measuring the value of shipments, new orders, and inventories. The data helps analysts, policymakers, and business leaders understand current industrial activity and predict future production trends.
Key Components of the Report
The M3 survey is unique because it provides a monthly snapshot of the entire manufacturing sector. The report has two main parts, which are released on a staggered schedule:
| 1. | Advance Report on Durable Goods: This is a preliminary report released about 18 working days after the end of each month. It focuses only on durable goods, which are products designed to last three or more years (e.g., cars, machinery, appliances). This report is closely watched because it's an early indicator of business spending. |
| 2. | Full Report on Manufacturers' Shipments, Inventories, and Orders: Released about a week after the advance report, the full report includes data on non-durable goods (e.g., food, textiles, chemicals) in addition to durable goods. This provides a more complete picture of the entire manufacturing sector. |
What the Data Measures
The M3 survey collects data on four key components:
| • | Shipments: The value of goods shipped by manufacturers during the month. This is a measure of current sales and production. |
| • | New Orders: The value of new orders received by manufacturers, net of cancellations. This is a leading indicator of future production commitments and business confidence. |
| • | Unfilled Orders (Order Backlog): The value of orders that have been received but not yet shipped. A growing backlog can signal strong demand and potential future production increases. |
| • | Inventories: The value of goods held by manufacturers at the end of the month. The inventories-to-shipments ratio is a key metric from this data; a high ratio can indicate weak demand or overproduction. |
How the Data are Used
The M3 report is a crucial tool for economic analysis. The data it provides is used by:
| • | Government Agencies: The Bureau of Economic Analysis (BEA) uses the data to calculate components of Gross Domestic Product (GDP). The Federal Reserve and Treasury Department also use it to help develop economic and monetary policies. |
| • | Businesses and Investors: Companies use the data to gauge the demand for manufactured goods and to inform their own production and inventory decisions. Investors use it to evaluate the health of specific industries and the broader economy. |
| • | Economists: Analysts closely examine the report, particularly the data on durable goods orders (especially "core capital goods," which excludes volatile defense and transportation orders), as a barometer of business investment and economic momentum. |