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Another DISASTROUS U.S. "durable goods" report
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TOPIC: Another DISASTROUS U.S. "durable goods" report
Another DISASTROUS U.S. "durable goods" report 2 Years, 6 Months ago Karma: 266
The U.S. economy is now in full FREE-FALL, as yet another piece of terrible news has hit the market.

Regular readers may recall one month ago that I noted the TERRIBLE report on U.S. durable goods orders for March. However, at the time I pointed out that this statistical category was ESPECIALLY volatile, and so I didn't place too much credence on a SINGLE bad report .

However two terrible reports CONSECUTIVELY is a different story, especially when the so-called "experts" were predicting the number to bounce back this month. Indeed, the propaganda machine itself notes this is the first time there have been back-to-back negative numbers in the last year. Let me get to specifics.

In March U.S. durable goods were reported to have fallen by 2.2%. That is a month-over-month number (i.e. expressed as a MONTHLY change not an ANNUAL change). Also, it is NOT adjusted for inflation.

If we adjust for inflation AND express this as an annual rate of change, then it works out to roughly an annual rate of decline of 37%. Now we have this month's number for April, and durable goods (excluding transportation) fell by 1.9% (month over month). Expressing that as an annual, inflation-adjusted number it works out to about a 33% annual decline.

This is the HEART of U.S. manufacturing, and at the CURRENT rate of decline 1/3 of all existing U.S. manufacturing will be GONE in one year. Hopefully this explanation helps to put these numbers in better context.

So if/when you hear more absurd lies about "strength" in U.S. manufacturing, or "jobs growth" in U.S. manufacturing, know that it is an absolute LIE. Meanwhile, the retail sector continues to shrink, government has become a net job-cutter, and the housing sector remains mired in the worst Depression in history.

And the mainstream media continues to call this "an economic recovery"...

"Demand for Business Equipment in U.S. Declines in April"

Companies placed fewer orders for computers, machinery and other capital equipment in April for a second month, indicating manufacturing in the U.S. is cooling.

Bookings for non-military goods excluding aircraft fell 1.9 percent after dropping 2.2 percent in March, the first back-to- back decline in a year, the Commerce Department said today in Washington. Other reports showed claims for jobless benefits were little changed last week and consumer confidence hovered near a four-month low.

“We can’t seem to really gather any steam,” said Julia Coronado, chief economist for North America at BNP Paribas in New York. “From consumer spending to hiring to manufacturing activity, everything is kind of moderate and OK but not particularly spectacular or satisfying.”

Slowdowns in Europe and parts of Asia combined with a cooling in business spending in the U.S. after the reduction of a government tax credit this year may restrain manufacturing. At the same time, Americans are buying cars at the fastest pace in four years, creating a rebound in auto making that is rippling through the economy.

Applications for jobless benefits decreased by 2,000 to 370,000 in the week ended May 19, in line with the median forecast of economists surveyed by Bloomberg News, according to data from the Labor Department.
Confidence Improves

Consumer confidence improved last week for the first time in a month as falling gasoline prices helped stem dismay over household finances, another report showed. The Bloomberg Consumer Comfort Index was minus 42 in the seven days ended May 20 compared with a four-month low of minus 43.6 the prior period. The measure slumped 12.2 points over the previous four weeks, wiping out almost the entire gain for the year.

Stocks rose, sending the Standard & Poor’s 500 Index higher for a fourth day, as a rally in Hewlett-Packard Co. overshadowed the slowdown in orders. The S&P 500 climbed 0.2 percent to 1,321.45 at 11:30 a.m. in New York.

Even with a slowdown, the U.S. factories stand out as a source of strength among global producers. Euro-area manufacturing slumped to a 35-month low, while factories in China contracted for a seventh straight time in May, according to separate data today. Business confidence in Germany declined, while Britain’s economic contraction in the first quarter was deeper than previously estimated, other reports showed.
Durable Goods

Demand for all U.S. durable goods, those meant to last at least three years, rose 0.2 percent, today’s report showed, matching the median forecast in a Bloomberg survey. Estimates of the 75 economists surveyed ranged from a drop of 2.8 percent to a 4.2 percent gain. The Commerce Department revised the March reading to a 3.7 percent decline from a previously estimated 3.9 percent drop.

Bookings for non-defense capital goods excluding aircraft are considered a proxy for future business investment in items such as computers, engines and communications gear.

Today’s report showed shipments of such goods, used in calculating gross domestic product, decreased 1.4 percent in April after rising 1.9 percent the previous month.

Economists at Morgan Stanley in New York reduced their estimate for growth this quarter to a 2.4 percent annual rate from 2.7 percent previously based on the slowdown in shipments combined with figures showing a smaller-than-expected gain in inventories.
Tax Benefit

The expiration at the end of 2011 of a tax incentive allowing 100 percent depreciation on equipment purchases may have prompted a slowdown in investments this year. The allowance for 2012 is 50 percent.

Demand for transportation equipment climbed 2.1 percent, reflecting a 5.6 percent increase in automobiles and parts, today’s report showed.

The report also showed unfilled orders for durable goods decreased 0.1 percent last month, while inventories climbed 0.3 percent.

The recovery in manufacturing will be slow, said Mike DeWalt, director of investor relations of Caterpillar Inc. (CAT), the largest maker of construction and mining equipment.

“Based on how poor 2009 was, how deep the recession was, what happened in the relatively modest improvements in 2010 and 2011, there is a lot of recovery that needs to happen,” DeWalt said at a May 23 conference. “It could be a quite extended recovery, but maybe not as strong as in the past. But our business as a signal has been actually positive.”
Purchasers’ Index

Manufacturing expanded in May at the slowest pace in three months, another report today showed. An index based on a survey of factory purchasing managers fell to 53.9 from 56 in April, London-based Markit Economics said in a preliminary estimate today. A reading above 50 indicates expansion. The report showed production, orders and factory employment expanded at slower rates this month.

Cisco Systems Inc. (CSCO) earlier this month reported fourth- quarter sales projections that missed analysts’ estimates. John Chambers, chief executive officer of the computer-networking equipment maker, said orders from bigger companies declined in the period ended April 28 and it’s taking longer to sign large deals with corporate customers.

“We are seeing a hesitant spending environment,” Chambers said on a May 9 conference call.
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