Factory orders dove 1.7% in February as reported today by the US Census Bureau.

The weakness did not stop with the headline number. January orders were revised lower to 1.2% from 1.6%.

Core capital goods plunged a whopping 2.5%, and shipments fell 0.7%.

Factory orders fell nearly in line with the Bloomberg Econoday consensus reading of -1.6% but economists did not take into account January revisions.

Highlights

Factory orders fell 1.7 percent in February, more than reversing what was a strong January which, however, is revised 4 tenths lower to a gain of 1.2 percent. February weakness includes a 0.4 percent drop in non-durable orders, one that reflects weakness in petroleum and coal products, and a steep 3.0 percent decline in durable orders which are revised 2 tenths lower from the advance release of minus 2.8 percent.

The February report makes for uncomfortable reading with orders for core capital goods falling 2.5 percent and pointing to continuing trouble for business investment. Other readings include a sharp 0.7 percent fall for total shipments, a 0.3 percent fall for unfilled orders, and a 0.4 percent fall for inventories though the latter is actually a positive given the decline in shipments and keeps the inventory-to-shipments ratio at 1.37.

This year’s fall in the dollar did nothing to visibly boost February’s data though there are hints of relief in last week’s giant surge for the ISM new orders index, one that points to a significant rebound in this report for March.

Factory Orders and Shipments

Factory Orders 2016-04-04

Economists were close to the headline number after reading the advance report that came out on March 24.

Core Capital Goods, Shipments, Inventories

  • Core Capital goods (non-defense capital goods excluding aircraft) were down year-over year for the 12th consecutive month. The last positive reading was January 2015.
  • Month-over-month shipments fell for 8 straight months.
  • Month-over-month inventories fell for 8 straight months.

Shipments

Shipments 2016-04-04

Inventory-to Shipments Ratio

inventory to shipments level - 2016-04-04

Don’t worry, it’s just a manufacturing recession.

Mike “Mish” Shedlock