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Friday, June 24, 2016

May Was A Weak Month For The Factory Sector

May proved to be a generally weak month for the factory sector. Minus signs spread across the durable goods report with total new orders down a very sizable 2.2 percent with ex-transportation orders, which exclude aircraft and vehicles, down 0.3 percent. The worst news comes from capital goods, a sector where weakness points to weakness in business investment and ultimately the nation's productivity. Orders for core capital goods fell 0.7 percent in the month while shipments fell 0.5 percent. Overall shipments also fell, down 0.2 percent with inventories in thankful contraction, down 0.3 percent. The dollar's decline this year has not done much to lift exports or the factory sector which going into Brexit, and the ensuing spike in the dollar, was as flat as it's been for the past year.


Recent History Of This Indicator:
Durable orders have been up and down with forecasts no less so. The range for May orders is between a 2.5 percent drop and a 4.9 percent surge with the ex-transportation range also wide, at minus 0.8 to plus 0.5 percent. Monthly swings aside, trends in this report have been flat with capital goods, however, turning lower in what is a negative indication for business investment.

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