Manufacturers’ Shipments, Inventories, & Orders

How the Data are Collected

Monthly Estimation Procedure

A link relative procedure derives the monthly universe estimates of shipments, unfilled orders, and total inventories for each industry category. The universe estimate for the previous month is multiplied by the monthly ratio of change tabulated for reporting companies in the current month to arrive at a universe estimate for current month. When an individual company reports unusually large changes from the previous month, or when a particular company has unique data patterns differing substantially from the movement shown by the rest of the reporting panel in a particular industry category, the company is excluded from the ratio of change calculation but included in the universe estimate of level. The effect of this procedure is to restrict the estimation for nonrespondents and firms not in the survey panel to the general trend of the industry.

The universe estimate of new orders is derived from the monthly estimate of shipments plus the change in unfilled orders between the current and prior period. The estimate includes orders that are received and filled in the same month as well as orders that have not yet been filled. It also includes the effects of cancellations and modifications of previously reported orders. The standard ratio estimate procedure is not followed for new orders because not all companies report new orders, and some that do report this item limit their reporting to specific products for which long lead times are required in the production cycle. These companies, in effect, exclude new orders received for products that are shipped from inventory.

A modified procedure also is used to estimate the stage of fabrication inventory data. In this procedure, the total inventory data estimated for each tabulated industry category are retabulated to the appropriate three-digit NAICS subsector levels and serve as control totals for the stage of fabrication data. Initial estimates are made for each of the stages of fabrication at the three-digit NAICS level using the ratio estimation procedure. The differences between the sum of the stage of fabrication detail and total inventories at the three-digit NAICS level are then allocated proportionally to the stage of fabrication figures to form the estimates. The reasoning behind this procedure is that a significant number of companies report total inventories but cannot report inventories by stage of fabrication.

Trading Day Adjustment

Variations in the rate of manufacturing activity resulting from different numbers of trading days in the same month for different years and variations in the length of months can be an important cause of month-to-month fluctuations in the shipments data. For many industries, these irregularities can be identified approximately and removed so that the underlying trend cycle stands out clearly.

Many of the shipments series have trading day factors calculated in the trading day regression analysis routine of the X-12 seasonal adjustment software. However, forty-two of the shipments series did not have identifiable trading day patterns and are only being adjusted for leap year and length of month variations.

Seasonal Adjustment Methodology

The monthly data are adjusted for seasonality at the most detailed level tabulated in the survey, using the X-12 ARIMA version of the Census Bureau’s seasonal adjustment program. The seasonally adjusted estimates for shipments, unfilled orders, and total inventories for M3 industry categories are calculated by dividing the unadjusted estimates by seasonal adjustment factors computed by the X-12 ARIMA seasonal adjustment program. Seasonally adjusted new orders are computed by adding the changes between current and prior period seasonally adjusted unfilled orders to the current month’s seasonally adjusted shipments.

The inventory by stage of fabrication data are seasonally adjusted at the three-digit NAICS subsector level for each stage. If the sum of the adjusted stage of fabrication does not equal the major group totals resulting from summing the seasonally adjusted total inventories for the individual industries, the difference is proportionally allocated to the stage of fabrication detail.

Staff calculate seasonal factors concurrently and include the current period observation in the calculation of the seasonal factor for that month. For information on specific measures used in the seasonal adjustment analysis, selection of options within the X-12 program for the individual industry series, and tests for the presence of seasonality, contact the Manufacturing and Construction Division, U.S. Census Bureau, Washington, DC 20233, or call 301-763-7630.

Benchmark Procedure

The M3 survey data are benchmarked to reduce both sampling and nonsampling errors. The relatively small monthly sample size as well as the differences that result from collecting the monthly data on a divisional basis as compared to the benchmark data on an establishment basis account for most of the revision. Also, some monthly reports received too late to be included in the monthly publications are added to improve the revised estimates of change of the historical monthly data.