With the second quarter roughly half over (from a data delivery standpoint), we have had three reasonably good or better hard data points, and at least a dozen bad ones.
Today we have another bad data point with Durable Goods Orders down 1.1% vs an Econoday consensus of -0.4%.
Moreover, April was revised lower to -0.9% from -0.7%.
Aircraft had been the strength but is now the weakness for durable goods which, pulled down by a second straight downswing for commercial aircraft, fell 1.1 percent in May. When excluding transportation, a reading that excludes aircraft, orders actually rose, but not very much at only 0.1 percent which falls 4 tenths shy of Econoday’s consensus. An unquestionable negative in the report is an unexpected 0.2 percent decline for core capital goods orders (nondefense excluding aircraft).
Orders for commercial aircraft fell a rounded 12 percent for a second straight month with orders for defense aircraft, which are always volatile, also hurting May, down 31 percent. Shipments of core capital goods, like orders for this category, are another weakness in the report, down 0.2 percent and when combined with April’s tiny 0.1 percent gain, don’t point to any punch at all for business investment in second-quarter GDP.
But there are positives in the report including a solid 0.6 percent jump in machinery orders, a category that helped limit the monthly dip in capital goods. Vehicles are also a positive with a strong 1.2 percent gain that follows a 0.5 percent rise in the prior month. Shipments of vehicles are on a similar climb.
Other readings include a 0.8 percent gain in total shipments that follows, however, two prior declines and an unwanted 0.2 percent decline in total unfilled orders which is once again back in the contraction column. Inventories rose 0.2 percent which is about in line with the rate of general activity.
This report isn’t all bad but the capital goods readings are a tangible disappointment for the second-quarter outlook, pointing to lack of confidence in business prospects. The data contrast sharply with the ongoing strength in regional surveys. But in actual government data, the factory sector isn’t having a breakout year as some had hoped.
The regional surveys are a joke. They have not matched actual hard data for over a year.
Motor Vehicles vs Reported Sales
Motor vehicles account for 23% of durable goods shipments and 24% of new orders.
Shipments were supposedly up a total of 1.8% in April-May period. New Orders were supposedly up 1.7% in the same timeframe.
Let’s match this up with auto sales.
- June 1: Motor Vehicle Sales Flat, Hope Turns to Second Half: What About Fleet Sales? Incentives?
- May 2: Auto Sales Puke Again: Year-Over-Year Totals: GM -6%, Ford -7.2%, Toyota -4.4%, Fiat-Chrysler -7.0%
- April 3: Auto Sales Final Numbers: Down 5.7%, Two-Year Low; Don’t Worry, It’s Just a Plateau!
Are the auto manufacturers planning a big June and July? If so, why? Revisions anyone?
Mike “Mish” Shedlock
It’s time for the “second-half, hockey-stick forecasts” to begin!
Brand new F22 and F35 fighters are flying West so fast you would think we are preparing for war.
Tony Bennett said:
Well, you know me … revisions is my middle name.
As has been the case for the past few years – “initial” number met more or less favorably by the Mr Market because, well, it ain’t so bad … then (quietly) revised down … which is completely ignored by Mr. Market.
Take today’s report. Not seasonably adjusted.
shipments $241.412 billion
new orders $230.520 billion
Compared against (revised several times)
shipments $227.509 billion
new orders $219.265 billion
May 2016 INITIAL numbers?
shipments $233.942 billion
new orders $227.761 billion
May 2017 will face multiple revisions … and more than likely DOWNWARD
The only way we recover is infrastructure and tax reduction law. We are still at 22% real unemployment. People who want to work and can . Fed numbers are BS.
The car companies will not recover without it and neither will heavy machinery, small dozers, wheel loaders etc, small commercial jets airplanes.
Tony Bennett said:
So deficits to the moon the answer?
This economy going nowhere fast until all the dead bodies (bad debt) brought out in the open and buried.
I want to see Bankruptcy … a lot of it.
Don’t you worry. NYC prime retail space sees major weakness e.g. Madison Avenue some 50 stores are available for rent. That’ the worst I have ever seen
Unrelenting bad news since March 2009. Awful !
Stop the negativity! The sky isn’t falling.
Today is OK and tomorrow is likely to be better – not as good as we would like but better.
Most everyone that wants to work can find job.
It takes along time to change behaviors and expectations.
A slowly shrinking government and making it harder to not work would be good steps.
denial ain't just a river said:
that what hitler said when Russians surrounded his bunker “stop the negativity”,”we have them right where we want them”
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