Courtesy of Mish.
Hard data for the second quarter continues to suffer despite diffusion indexes that have generally performed better. Put more credence on the hard data.
Factory orders in April declined -.2% in line with the Econoday consensus.
The Census Department revised March up from 0.2% to 1.0%, but that is mostly a mirage of aircraft orders that will impact production years from now. Also, February new orders were revised lower, taking away half of March’s gain.
The weak run of second-quarter data continues with April’s 0.2 percent decline in factory orders. The durable goods component fell 0.8 percent in the month reflecting a give back in aircraft orders and wide weakness for most readings. Orders for non-durable goods rose 0.4 percent reflecting moderate gains for food and energy.
The ex-transportation reading, which excludes aircraft, managed only a 0.1 percent gain in the month with core capital goods orders (nondefense ex-aircraft) also up only 0.1 percent. April’s shipments of core capital goods, which are an input into second-quarter GDP, also rose only 0.1 percent which is another negative in this report. And only a marginal positive for GDP is a 0.1 percent rise in total inventories. Total shipments were unchanged in the month keeping the inventory-to-shipments ratio unchanged at 1.38.
Positives in the report include a 0.6 percent rise for motor vehicle orders and a 1.6 percent rise for computers. Also total unfilled orders, which contracted through most of last year, are up 0.2 percent for a second straight small gain.
Another positive in the report is an upward revision to March factory orders which now stand at 1.0 percent following February’s 0.8 percent gain. But the prior gains were driven by aircraft as the ex-transportation reading could move only modestly higher. The factory sector is not living up to the promise of the high-flying regional reports and, instead of accelerating this year, now appears to be struggling.
Factory Sector Struggles
The factory sector is not just now struggling. Rather, Econoday is just now noticing. Other than one report on industrial production, nearly everything has struggled.
Factory Orders and Shipments
Revisions
Ther numbers in blue reflect as-reported numbers last month. Although March new orders were up 0.8 percentage points from the as-reported numbers last month, revisions took January-February down 0.4 percentage points. Shipments revisions were flat.
