Posts Tagged ‘factory orders’

Economists Surprised Again as German Factory Orders Unexpectedly Fall

Economists Surprised Again as German Factory Orders Unexpectedly Fall

Pig whispering in another pigs ear, close-up

Courtesy of Mish

Economists are surprised by the strangest things.

The UK has announced austerity measures, Greece, Spain, Portugal (3 little PIIGS) are in forced austerity programs, and Germany is paying more attention to deficit reduction than growth (rightfully so), yet somehow economists expect factory orders in Germany to keep improving.

Please consider the Bloomberg report German Factory Orders Unexpectedly Fell in May

German factory orders unexpectedly fell for the first time in five months in May as demand for goods made in Europe’s largest economy waned across the 16- nation euro region.

Orders, adjusted for seasonal swings and inflation, declined 0.5 percent from April, when they rose a revised 3.2 percent, the Economy Ministry in Berlin said today. Economists had forecast a 0.3 percent gain for May, according to the median of 30 estimates in a Bloomberg News survey. From a year earlier, orders increased 24.8 percent.

Europe’s sovereign debt crisis has pushed the euro down 17 percent against the dollar since late November, making exports to countries outside the currency bloc more competitive just as the global recovery gathered pace. With governments cutting spending to convince investors that budget deficits are under control, growth in the euro area, Germany’s biggest export market, may slow.

“You have to see today’s decline in orders in the context of strong increases in the previous months,” said Klaus Schruefer, an economist at SEB Bank AG in Frankfurt. “It doesn’t throw the German economy off its recovery track.”

Recovery Off The Rails

While it is true that any month can be an outlier, the European macro picture is anemic in light of austerity programs virtually everywhere you look.

Moreover, the Asia picture is anemic, the US macro picture is anemic, and indeed the entire global macro picture is anemic. Yet economists, an ever optimistic lot, still have faith in a recovery 100% based on unsustainable government spending even though governments in general are cutting government spending in an attempt to reduce budget deficits.

For now, the US is an exception to global budget tightening. However, it should be perfectly clear that Congress is taking a harder stance towards more stimulus efforts as a measure to extend unemployment benefits has died in the US senate.

Talk of continued recovery is nonsense. The best anyone can possibly hope for…
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Services ISM Growth Slows – Jobs, Imports, Export Orders Contract; Manufacturing vs. Services ISM – Which is More Important and Why?

Services ISM Growth Slows – Jobs, Imports, Export Orders Contract; Manufacturing vs. Services ISM – Which is More Important and Why?

Courtesy of Mish 

In yet another sign the economy is cooling substantially, three components of the June Services ISM are now in contraction, with the overall index declining much faster than economists expected.

From the June 2010 ISM Report On Business®:

In June, the NMI registered 53.8 percent, indicating continued growth in the nonmanufacturing sector for the sixth consecutive month, but at a slightly slower rate than in May. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

Employment activity in the nonmanufacturing sector contracted in June after one month of growth. ISM’s Non-Manufacturing Employment Index for June registered 49.7 percent.

Orders and requests for services and other non-manufacturing activities to be provided outside of the United States by domestically based personnel contracted in June after three consecutive months of growth.

ISM’s Non-Manufacturing Imports Index contracted in June after three consecutive months of growth.

The above link also contains the Manufacturing ISM.

Recovery Withers on the Vine

There is really not much to like in either of the ISM reports.

Inquiring minds also note Factory Orders Fall More Than Expected; Recovery Withers on the Vine

You should not have to be a genius to figure out the rebound in manufacturing was a result of four factors now withering on the vine.

  • Inventory replenishment
  • Unsustainable stimulus
  • Housing incentives pushing demand forward on appliances
  • Rebound in auto sales from extremely depressed levels

Is Europe going to lead the world recovery? China? US Consumers?

The answers are No, No, and No

Manufacturing was the one bright spot but its best days are now long gone. Moreover China Manufacturing Slows for Second Month; US ISM Weaker than Expected; Weekly Unemployment Claims Stubbornly High; Existing Home Sales Plunge

Budgetary Murder

This depression (and we are in one, masked only by safety nets galore), is The Price We Pay For Budgetary Murder.

Unfortunately, the budgetary murder continues unabated, and that will prolong this depression.

Japan is in its mess because of Keynesian and Monetarist stimulus, we are in this mess because of Keynesian and Monetarist stimulus, and the UK is in its mess because of Keynesian and Monetarist stimulus. Yet the


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Factory Orders Fall More Than Expected; Recovery Withers on the Vine

Factory Orders Fall More Than Expected; Recovery Withers on the Vine

Courtesy of Mish 

The "nascent recovery" was led by manufacturing and now the one bright spot is showing signs of age, just as state payrolls are about to get clobbered.

Please consider Orders to U.S. Factories Declined in May More Than Forecast.

Orders placed with U.S. factories declined in May more than forecast, a sign that manufacturing may be starting to cool.

The 1.4 percent decrease in bookings was the biggest since March 2009 and followed a revised 1 percent gain in April, the Commerce Department said today in Washington. Economists forecast orders would drop 0.5 percent, according to the median projection in a Bloomberg News survey.

Estimates of total orders in the Bloomberg survey of 70 economists ranged from a decline of 2 percent to a gain of 1.5 percent. The decrease in May was the first in nine months.

Manufacturing in June expanded at the slowest pace this year as factories received fewer orders and demand from abroad slowed, a report showed yesterday. The Institute for Supply Management’s manufacturing gauge fell to 56.2 from 59.7 a month earlier. Readings greater than 50 indicate expansion. The Tempe, Arizona- based group’s new orders measure fell to the lowest level since October.

Demand for durable goods, which make up just over half of total factory demand, decreased 0.6 percent in May. Shipments of durable goods fell 0.3 percent.

Bookings of non-durable goods, including food, petroleum and chemicals, decreased 2.1 percent. The decline reflected a drop in the value of orders for petroleum products, clothing, fertilizers and beverages.

Orders for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 3.9 percent after a 2.8 percent drop in April. Shipments of these goods, used in calculating gross domestic product, rose 1.4 percent after rising 0.4 percent.

Factory inventories declined 0.4 percent in May, and manufacturers had enough goods on hand to last 1.25 months at the current sales pace.

Recovery Withers on the Vine

You should not have to be a genius to figure out the rebound in manufacturing was a result of four factors now withering on the vine.

  • Inventory replenishment
  • Unsustainable stimulus
  • Housing incentives pushing demand forward on appliances
  • Rebound in auto sales from extremely depressed levels

Is Europe going to lead the world recovery? China? US Consumers?


continue reading


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