This morning's April factory orders report from the Census Bureau showed yet another seasonally adjusted decline. This time, they fell 0.4 percent, seriously underperforming expectations that they would come in flat.
This naturally brought forth another sighting of the U-word ("unexpectedly"), this time at Reuters. Both Reuters and the Associated Press failed to note how steep the year-over-year declines in orders — and for that matter, shipments — have become:
Also note that the year-over-year declines have been worsening during the six-month period presented.
Rather than asking themselves how much economic growth is being penalized because of seasonal adjustment problems, the business press and pundits should be wondering how much the currently reported first-quarter contraction of 0.7 percent is understated.
Now that winter is in the rearview mirror, the press is having to search for new excuses to explain away continued economic weakness.
The current go-to copouts, as seen in these excerpts from AP's Josh Boak and Reuters' Lucia Mutikani, are the stronger dollar and cheap oil:
U.S. factory orders tumbled in April, a sign that manufacturers are struggling amid a stronger dollar and cheaper oil.
... Manufacturers have struggled in recent months with a pair of global economic pressures. The stronger dollar has increased the cost of U.S.-made goods overseas, cutting into sales in Europe and parts of Asia. At the same time, cheaper oil prices have slashed demand from energy firms for pipelines and equipment. The spring rebound from a frigid winter that shut down assembly lines has yet to blossom.
(Reuters)
New orders for U.S. factory goods unexpectedly fell in April as demand for transportation equipment and a range of other goods weakened, suggesting that manufacturing remained constrained by a strong dollar and spending cuts in the energy sector.
... Manufacturing, which accounts for about 12 percent of the U.S. economy, has been hit by the dollar and lower crude oil prices, which are pressuring the profits of multinational corporations and oil firms.
It's amazing how both Boak and Mutikani missed a far more important factor: weak domestic end user and consumer demand.
Actually, no it's not. Recognizing that problem — or the ever-steepening year-over-year declines — might cause readers to question current economic policies. We can't have that.
Cross-posted at BizzyBlog.com.
