The serious sales slumps combined with inventory buildups in manufacturing and wholesale industries, documented in previous NewsBusters posts here, here, here, and here — that's just in the past ten days — continues. So does the establishment press's determination to ignore them.
At the Associated Press today, Christopher Rugaber was tasked to cover the Federal Reserve's June release on Industrial Production. The good news is that the Fed report showed an overall increase (+0.3 percent) for the first time in three months. The bad news is that none of it came in manufacturing, which was flat as a pancake for the second straight month. The net sum of the monthly manufacturing declines so far this year is -0.3 percent. While Rugaber concentrated his attention where it belonged, i.e., on manufacturing, since it makes up 75 percent of all industrial activity, he still managed to come up with all kinds of explanations for the lack of progress — except the two most obvious (bold is mine):
US FACTORY OUTPUT FLAT FOR 2ND STRAIGHT MONTH
U.S. factory production was unchanged for a second straight month in June as a sharp drop in auto manufacturing was offset by greater output of furniture and chemicals.
The cutback in auto production comes after three months of healthy gains and is likely temporary. Still, manufacturers are struggling to overcome several challenges, including the strong dollar, weak overseas growth, and cheaper oil.
"Cheaper oil" might be expected to be a net positive. After all, though "makers of everything from steel pipes to earthmovers" serving the oil sector are being hurt, every other sector should benefit from lower costs. Perhaps the problem here is that so much manufacturing for domestic consumption is now occurring overseas that there aren't that many other robust sectors left. Regardless, it still is quite reasonable to believe that cheaper oil benefits the entire economy when the service sector, which is over 80 percent of the economy now, gets factored in.
The far bigger point is that manufacturers aren't ramping up their output because their shipments have been down from two years ago during four of this year's first five months, while incoming orders have come in lower than three years ago in all of them:
Compounding the problem, though there are very early signs that they might be getting things under control, manufacturers are sitting on very high stockpiles:
Seasonally adjusted inventories this year have been running about 3 percent higher than two years ago, even though shipments have fallen. Inventories have been running about 6 percent higher than three years ago, even though orders have fallen during that same time frame.
Something's got to give. Either there's a ton of demand around the corner, or some serious inventory-cutting is in order. The odds would seem to be with the latter.
Consistent with previous AP items I've noted, Rugaber didn't tell his readers about either the sales or inventory problem. That was also the case in today's related reports found at Bloomberg and Reuters.
The "problem" is that if anybody broke the blackout and told their readers what's really going on, they might start thinking that Dear Leader's economy isn't running along reasonably smoothly. We can't have that.
Cross-posted at BizzyBlog.com.
