Nonetheless, that is what Bloomberg reports in Orders for U.S. Durable Goods Fell in June
Orders for U.S. durable goods unexpectedly dropped in June, raising the risk that a slowdown in business investment will weigh on the world’s largest economy in the second half of the year.Supply Side Nonsense
Manufacturers face a slowdown in consumer spending just as they are poised to rebound from the parts shortages caused by Japan’s earthquake, indicating production may keep cooling. Companies are also cutting back on hiring, which may further temper household demand.
Orders excluding volatile transportation equipment, like commercial aircraft, increased 0.1 percent after a 0.7 percent gain, the Commerce Department said. Demand for transportation gear dropped 8.5 percent, countering industry data.
Boeing Co. (BA), the largest U.S. maker of aircraft, said it received orders for 48 airplanes in June, up from 27 the prior month. Industry data, nonetheless, may not correlate precisely with the government statistics on a month-to-month basis because it doesn’t take into account the prices.
Orders for non-defense capital goods excluding aircraft, a proxy for business investment in items like computers, engines and communications gear, decreased 0.4 percent after rising 1.7 percent the prior month. The drop signals companies scaled back investment plans.
Demand for machinery dropped 2.3 percent, the most since January. Computer bookings fell 0.8 percent and those for automobiles decreased 1.4 percent.
Xerox Chief Executive Officer Ursula Burns said the temblor that struck Japan in March and hurt the company’s suppliers will affect the provider of printers and business services in the second and third quarters.
“Let me be clear: Demand is not the problem here,” Burns said in a July 22 call with analysts. “This is a supply issue. The second quarter impact was expected and created a backlog for orders taken in the quarter, orders that we’ll be filling during the balance of the year.”
Xerox CEO Ursula Burns: "Let me be clear: Demand is not the problem here. This is a supply issue."
One has to wonder "What the hell is she smoking?" On the slim chance this is really only a supply issue, it is unique to Xerox.
Recap from Census Bureau
From the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders June 2011
New Orders
- New orders for manufactured durable goods in June decreased $4.0 billion or 2.1 percent to $192.0 billion. This decrease, down two of the last three months, followed a 1.9 percent May increase.
- Excluding transportation, new orders increased 0.1 percent.
- Excluding defense, new orders decreased 1.8 percent.
- Transportation equipment, also down two of the last three months, had the largest decrease, $4.2 billion or 8.5 percent to $45.4 billion. This was due to nondefense aircraft and parts which decreased $2.8 billion.
Shipments
- Shipments of manufactured durable goods in June, up six of the last seven months, increased $1.0 billion or 0.5 percent to $196.0 billion. This followed a 0.5 percent May increase.
- Machinery, up four of the last five months, had the largest increase, $0.7 billion or 2.6 percent to $29.1 billion.
Inventories
- Inventories of manufactured durable goods in June, up eighteen consecutive months, increased $1.6 billion or 0.4 percent to $357.2 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 1.2 percent May increase.
- Transportation equipment, also up eighteen consecutive months, had the largest increase, $1.2 billion or 1.1 percent to $109.1 billion. This was also at the highest level since the series was first published on a NAICS basis and followed a 1.7 percent May increase.
Capital Goods
- Nondefense new orders for capital goods in June decreased $3.0 billion or 4.1 percent to $69.8 billion.
- Defense new orders for capital goods in June decreased $0.3 billion or 3.9 percent to $8.6 billion.
Summary
- Shipments Up
- New Orders Down
- Capital Goods Orders Plunge
- Record High Inventories
That anemic mix does not portend well for the second-half.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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