26 August 2021
Data: Census Bureau, FRED; Chart: Axios Visuals
Orders for durable goods stalled unexpectedly in July. But manufacturers have plenty of backlogs to work through.
Why it matters: There are a lot of businesses across the economy with empty shelves as they wait for manufacturers to ship the goods. This has been crimping sales while also driving inflation.
- Order backlogs offer a snapshot of how much stuff manufacturers have yet to deliver.
By the numbers: Unfilled orders — the backlog — of manufactured goods grew 0.3% month over month to $1.23 trillion in July, according to Census Bureau data released Wednesday.
- This was the sixth consecutive month of gains.
- The backlog of core capital goods orders climbed to a record-high $230.9 billion.
What they’re saying: “Huge order backlogs will keep manufacturers busy,” ING chief international economist James Knightley says. “With customer inventories at all-time lows, manufacturers are also gaining pricing power and this can already be seen in numerous surveys of prices received.”
- “Backlogs in the manufacturing sector are expected to take well into 2022 to clear,” Grant Thornton chief economist Diane Swonk says.
Between the lines: While this may sound good from a demand perspective, the pressure is high for manufacturers to compete.
- “When it comes to unfilled orders for manufacturers, it’s like being a bartender on a super busy night,” Tim Quinlan, Wells Fargo senior economist, tells Axios. “It’s good in the sense that you are three deep at the bar.”
- “But it can be bad if you’re out of lime wedges, you're running out of booze and your other bartender called in to tell you he just took another job. You’re slammed, but your customers are gonna find another place for a drink if you can’t pick up the pace."
Zoom out: UBS U.S. economist Sam Coffin notes that while unfilled orders have been on the rise, shipments of goods have risen even faster.
- “The ratio of unfilled orders to shipments surged during the pandemic amid supply constraints,” he tells Axios. “It has fallen back to a more normal ratio and does not look particularly high or low, in aggregate, now.”
- In fact, shipments climbed 2.2% month over month to a record-high $257.8 billion in July.
The bottom line: The good news for manufacturers is they have a lot of stuff to make. The good news for their customers is that this stuff is getting manufactured and shipped at an increasing rate.
Transcripts show George Floyd told police "I can't breathe" over 20 times
Section2Newly released transcripts of bodycam footage from the Minneapolis Police Department show that George Floyd told officers he could not breathe more than 20 times in the moments leading up to his death.
Why it matters: Floyd's killing sparked a national wave of Black Lives Matter protests and an ongoing reckoning over systemic racism in the United States. The transcripts "offer one the most thorough and dramatic accounts" before Floyd's death, The New York Times writes.
The state of play: The transcripts were released as former officer Thomas Lane seeks to have the charges that he aided in Floyd's death thrown out in court, per the Times. He is one of four officers who have been charged.
- The filings also include a 60-page transcript of an interview with Lane. He said he "felt maybe that something was going on" when asked if he believed that Floyd was having a medical emergency at the time.
What the transcripts say:
- Floyd told the officers he was claustrophobic as they tried to get him into the squad car.
- The transcripts also show Floyd saying, "Momma, I love you. Tell my kids I love them. I'm dead."
- Former officer Derek Chauvin, who had his knee on Floyd's neck for over eight minutes, told Floyd, "Then stop talking, stop yelling, it takes a heck of a lot of oxygen to talk."
Read the transcripts via DocumentCloud.