All the attention given to the decidedly mixed employment report the government issued early Thursday morning and the ongoing debt drama in Greece overshadowed a very disappointing release on factory orders which arrived from the Census Bureau 90 minutes later.
In a cursory eight-paragraph report at the Associated Press, Martin Crutsinger relayed the basic bad news, but studiously avoided citing the kinds of statistics which might have gotten noticed on the cluttered news day. These items include but are certainly not limited to the fact that seasonally adjusted orders have declined in eight of the past ten months, that reported monthly shipments have been coming in below levels seen two years ago, and that reported monthly orders are trailing levels seen three years ago.
The factory orders report was bad enough that it generated a variant of the commonly used U-word ("unexpectedly"). At Reuters, May's seasonally adjusted 1.0 percent drop reported on Thursday was described as "more than expected." Actually, a lot more, as advance predictions were for a decline of between 0.5 percent and 0.7 percent. Additionally, as I noted at my home blog on Friday, the raw numbers were so bad that a seasonally adjusted result of -2.0 percent or worse would have been easily defensible.
Crutsinger's delivery of the bad news, which only comprised five of his report's eight paragraphs before going into predictable cut-and-paste verbiage about how everyone just knows that "economic activity rebounded in the April-June quarter," concentrated only on the past several months:
US FACTORY ORDERS FELL 1 PERCENT IN MAY
Orders to U.S. factories fell in May by the largest amount in three months, while a key category that signals business investment plans dropped for a second month.
Factory orders declined 1 percent in May from April, when orders retreated 0.7 percent, the Commerce Department reported Thursday. Orders in a category that serves as a proxy for business investment were down 0.4 percent.
Much of the weakness in May reflected a big 35.3 percent fall in demand for commercial aircraft. But even outside of the volatile transportation category, orders were up only a tiny 0.1 percent. The lackluster showing suggests that manufacturing is still struggling with challenges such as lower energy prices and a strong dollar, which dampens exports.
Durable goods, items expected to last at least three years, dropped 2.2 percent in May, even weaker than a preliminary report last week that had estimated a 1.8 percent drop. Orders for nondurable goods edged up a slight 0.2 percent.
American factories have struggled this year because a strong dollar has made U.S. goods more expensive overseas, hurting American exports. Falling energy prices have also trigged sharp cutbacks in investment spending by oil companies.
Crutsinger should have been telling readers that this year's seasonally adjusted monthly levels of shipments have been below levels seen in 2013 in four out of five reported months so far this year. Meanwhile, monthly orders have come in below 2012 in all five months:
This year's January-May shipments are 3.5 percent below last year's first five months. Orders are down by 5.7 percent.
The contrarian blog Zero Hedge contends that these results "scream recession."
Even if they don't, they don't seem to justify even the first quarter's below breakeven economic growth result (an annualized contraction of 0.2 percent), let alone the unduly confident second-quarter predictions, which Crutsinger dutifully reported with no skepticism, of annualized growth of "around 2.5 percent."
Cross-posted at BizzyBlog.com.
