Following Friday’s jobs report fail, new factory orders come in negative for first time in over a year
Following last Friday’s job report in which only 138,000 were created in the month of May, another report that acts as a signal for the strength of the economy was announced on June 5 as new factory orders in the month of April declined for the first time since February of 2016.
Factory orders for durable goods represent a two-fold indicator for businesses. ¬†First, it shows how much growth in retail may actually be taking place as consumer demand calls for increased production. ¬†And second the report also represents whether companies need to replenish their inventories.
In the case of April’s report, the two factors were both negative as consumer demand and higher inventories led to the decline in new factory orders.
After 4 straight months of gains, Factory Orders declined 0.2% MoM in April with Durable Goods New Orders tumbling 0.5% (final April print) – the worst drop since Feb 2016.
Despite notable upward revisions for March (from +0.2% to +1.0%), April Factory orders dropped 0.2% MoM (in line with expectations), breaking the recent streak of improvements. – Zerohedge
While skyrocketing inventories for automobiles are not part of the durable goods equation in this report, all one has to do is look at the ever growing ‘parking lots’ that are expanding across the country to correlate the fact that consumer spending is slowing down, and businesses are having to adjust accordingly to this decline.
From November to April, economic sentiment soared as businesses believed the hype of a Donald Trump boom, and a quick return to Making America Great Again. ¬†But the fact of the matter is today’s report represents a much deeper problem in the U.S. economy, and was already in play long before Trump took over the Presidency four months ago.
Kenneth Schortgen Jr¬†is¬†a writer for The Daily Economist, Secretsofthefed.com,¬†Roguemoney.net, and Viral Liberty, and hosts¬†the popular youtube podcast on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.