Thursday, August 2, 2012

US factory orders drop 'unexpectedly' in June 2012, biggest drop in non-durables in more than 3 yrs.

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"The industrial heartland had been doing all the heavy lifting when it came to driving the economy.”"...

8/2/12, "Orders to U.S. Factories Unexpectedly Declined 0.5% in June," Bloomberg, L. Woellert

"Orders placed with U.S. factories unexpectedly declined in June, reflecting less demand for business equipment and the biggest decrease in bookings for non- durable goods in more than three years.

The 0.5 percent drop in bookings followed a revised 0.5 percent increase in the prior month, the Commerce Department said today in Washington. The median forecast of economists in a Bloomberg News survey called for a 0.5 percent gain. June orders for durable goods climbed 1.3 percent, revised from the 1.6 percent surge reported last week. Demand for non-durable items, reported today for the first time, slumped 2 percent, the biggest drop since March 2009....

The industrial heartland had been doing all the heavy lifting when it came to driving the economy,” Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania, said in an e-mail before the report. “Right now, the sector looks a bit tired.”

Estimates in the Bloomberg survey of 54 economists ranged from a decline of 0.9 percent to an increase of 1.9 percent. The Commerce Department revised the May figure from a previously reported increase of 0.7 percent.

The decrease in non-durable goods orders followed a 0.4 percent drop in May and reflected broad-based declines in sales of everything from petroleum products to chemicals to food.

Factory orders excluding the volatile transportation category, decreased 1.8 percent in June, the biggest drop since March 2009, after no change the month before.

Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, fell 1.7 percent in June. Shipments of those goods, which are used in calculating gross domestic product, climbed 1 percent for a second month.

An unemployment rate that’s exceeded 8 percent for 41 straight months is restraining household spending, which accounts for about 70 percent of the economy.

At the same time, automakers have been a source of strength. Toyota Motor Corp. and Honda Motor Co. are on pace for record production in North America this year, and Chrysler Group LLC is boosting output to meet demand with the industry on track for its best annual sales total since 2007.

Cars and light trucks sold at a 14.1 million annual rate in July, unchanged from the prior month, industry figures showed yesterday. It also matched the average for the second quarter, indicating little momentum as the industry heads for the best year since 2007, before the last recession....

Factory inventories increased 0.1 percent in June, today’s report showed, while shipments slumped 1.1 percent, bringing the inventory-to-shipments ratio to 1.29 months, the highest since November, from 1.27 months....

The Institute for Supply Management’s July factory index, held near a three-year low of 49.7 reached in June, the Tempe, Arizona-based group said yesterday. A reading below 50 indicates a slowdown. U.K. manufacturing shrinking the most in more than three years and euro-area factories reducing output."


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