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Manufacturers' New Orders Significantly Miss Estimates Second Month

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Published : February 17th, 2020
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Category : Opinions and Analysis

Factory orders rose 0.1% in December following two months of decline. Economists expected a 0.6% rise.

New orders for manufactured goods in December, up following two consecutive monthly decreases, increased $0.3 billion or 0.1 percent to $499.9 billion, the U.S. Census Bureau reported today. This followed a 0.5 percent November decrease. Shipments, down three consecutive months, decreased $0.9 billion or 0.2 percent to $504.9 billion. This followed a 0.5 percent November decrease. Unfilled orders, also down three consecutive months, decreased $0.9 billion or 0.1 percent to $1,180.3 billion. This followed a 0.2 percent November decrease. The unfilled orders‐to‐shipments ratio was 6.55, down from 6.58 in November. Inventories, down two consecutive months, decreased $0.1 billion or virtually unchanged to $681.5 billion. This followed a 0.1 percent November decrease. The inventories‐to‐shipments ratio was 1.35, unchanged from November.

Key Items

  • Excluding transportation, new orders fell 0.6%.
  • Orders for non-defense aircraft and parts rose 28.4% while defense aircraft and parts fell 30.5%.
  • Motor vehicles and parts orders rose 2.4%.
  • Core capital goods, defined as non-defense capital goods excluding aircraft fell a sharp 1.0%. Last month core capital goods order fell 1.1%.
  • Consumer goods also fell a sharp 1.0%. Last month, consumer goods orders fell 2.4%.

Core capital goods are a measure of future manufacturing expansion or contraction. The decline is troubling.

I suspect a huge auto inventory problem looms with autos.

Transportation orders skewed this report. It's a lot worse than it appears at first glance.

Finally, note that Inventories Soar in December

Wholesales inventories rose 1.1% and retail inventories rose 0.9%.

Source : moneymaven.io
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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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