Manufacturing slid 1.2% in June, private-sector wages dropped

posted at 12:55 pm on August 3, 2010 by Ed Morrissey

Today the Commerce Department released two reports on economic activity in June, finalizing numbers that had been hinted at through other indicators.  Manufacturing fell 1.2%, which followed a 1.8% decrease in May.  New orders, shipments, and unfilled orders all fell, while inventories rose:

New orders for manufactured goods in June, down two consecutive months, decreased $5.1 billion or 1.2 percent to $406.4 billion, the U.S. Census Bureau reported today. This followed a 1.8 percent May decrease. Excluding transportation, new orders decreased 1.1 percent. Shipments, also down two consecutive months, decreased $3.5 billion or 0.8 percent to $411.2 billion. This followed a 1.8 percent May decrease. Unfilled orders, down slightly following two consecutive monthly increases, decreased $0.3 billion to $802.8 billion. This followed a 0.3 percent May increase. The unfilled orders-to-shipments ratio was 5.60, down from 5.61 in May. Inventories, down two consecutive months, decreased $0.5 billion or 0.1 percent to $520.0 billion. This followed a 0.4 percent May decrease. The inventories-to-shipments ratio was unchanged at 1.26.

Inventories actually rose in durable goods in June by 1.1%, which follows a 1.2% increase in May.  That’s not a good sign as demand and manufacturing fall.  It portends a further decrease in manufacturing activity and the need to discount to clear inventory, neither of which give indications of expanding employment.

Meanwhile, private sector wages dropped while overall wages remained stagnant, according to a second report released today:

Personal income increased $3.0 billion, or less than 0.1 percent, and disposable personal income (DPI) increased $5.1 billion, or less than 0.1 percent, in June, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $2.9 billion, or less than 0.1 percent.  In May, personal income increased $40.5 billion, or 0.3 percent, DPI increased $36.9 billion, or 0.3 percent, and PCE increased $8.6 billion, or 0.1 percent, based on revised estimates.

Real disposable income increased 0.2 percent in June, compared with an increase of 0.4 percent in May. Real PCE increased 0.1 percent, compared with an increase of 0.2 percent.

In the private sector, the news was worse:

Private wage and salary disbursements decreased $5.2 billion in June, in contrast to an increase of $19.2 billion in May. Goods-producing industries’ payrolls decreased $8.9 billion, in contrast to an increase of $10.4 billion; manufacturing payrolls decreased $6.0 billion, in contrast to an increase of $7.8 billion. Services-producing industries’ payrolls increased $3.7 billion, compared with an increase of $8.8 billion. Government wage and salary disbursements decreased $0.6 billion, in contrast to an increase of $7.0 billion. The decline in the number of temporary workers for Census 2010 subtracted $3.4 billion at an annual rate from federal civilian payrolls in June; the hiring of additional temporary workers had added $5.7 billion at an annual rate in May. …

Proprietors’ income decreased $4.4 billion in June, in contrast to an increase of $2.2 billion in May.

This follows on the last unemployment report from June (July’s report is due on Friday), which showed a gain of 83,000 private-sector jobs — not enough to keep up with population growth — while 225,000 temporary Census workers lost their jobs.  More of the latter were shed in July, which means that the numbers will probably look poor on Friday anyway.  However, the drop in private-sector compensation belies the idea that the jobs market expanded in any meaningful way in June.  And that means bad news for the government as well:

Personal current taxes decreased $2.0 billion in June, in contrast to an increase of $3.6 billion in May. Disposable personal income (DPI) — personal income less personal current taxes — increased $5.1 billion, or less than 0.1 percent, in June, compared with an increase of $36.9 billion, or 0.3 percent, in May.

By almost all measures, the economy has slowed considerably from what was already an anemic pace.  Moreover, wage earners are losing ground.  Small wonder, then, that demand and consumption have stalled and started to decline.

Update: Pending home sales index falls to a new low in June, according to Calculated Risk (via King Banaian).


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Someone needs to tell Turbo Tax Timmy.

Disturb the Universe on August 3, 2010 at 12:57 PM

This is not what Mr. Geitner says.

Cindy Munford on August 3, 2010 at 12:57 PM

Tim Geitner don’t say that!

fourdeucer on August 3, 2010 at 12:58 PM

The economy may not be doing so hot, but have you noticed the incredible improvement in Obama’s tee shot?

Cicero43 on August 3, 2010 at 1:00 PM

With reports like this, we should raise taxes!!

cyclown on August 3, 2010 at 1:01 PM

Wow, too much information… maybe we should check Daily Kos and HuffPo to get another side of this “story.”

mjbrooks3 on August 3, 2010 at 1:01 PM

slip sliding away…..

upinak on August 3, 2010 at 1:01 PM

Hope and Change.

Thank you, 52%’ers.

Bishop on August 3, 2010 at 1:02 PM

So let me get this straight. Socialism doesn’t work?

The first rule of Socialist Club is: you do not talk about Socialist Club. The second rule of Socialist Club is: you do not talk about Socialist Club.

Mojave Mark on August 3, 2010 at 1:03 PM

“Unexpectedly.”

glockomatic on August 3, 2010 at 1:04 PM

Meanwhile, private sector wages dropped while overall wages remained stagnant

Read between those lines you will soon have a lot of really mad “private sector” wager earners.

WitchDoctor on August 3, 2010 at 1:05 PM

At least Obama understands what we Americans are experiencing!

Beaglemom on August 3, 2010 at 1:06 PM

Hunker Down Dog Days of Summer…

ted c on August 3, 2010 at 1:07 PM

RECOVERY SUMMER! WEEEEEEEEE! ISN’T HOPE-N-CHANGE GREAT, GUYS?

Good Lt on August 3, 2010 at 1:07 PM

Limbaugh had a bit about China factory hiring 200,000 workers to build iPhone and iPad.

Hows that moratorium on drilling for oil working out?

Skandia Recluse on August 3, 2010 at 1:08 PM

Recovery summer…

sandee on August 3, 2010 at 1:08 PM

Yep, private sector wages drop but they still want to raise taxes so no government workers are laid off.

Blake on August 3, 2010 at 1:09 PM

your tax dollars at work

ConservativePartyNow on August 3, 2010 at 1:10 PM

So who are you going to believe? Obama and Biden or your lying wallet?

There’s really one one way out of this.

A new Obama speech.

SlaveDog on August 3, 2010 at 1:12 PM

Biden, I put you in charge of the stimulus. Your out, Hillary will be on the ticket in 2012.

Hummer53 on August 3, 2010 at 1:13 PM

I’ll have a Double Dip please, with extra misery.

Bat Chain Puller on August 3, 2010 at 1:14 PM

Hope and Change.
Thank you, 52%’ers.
Bishop on August 3, 2010 at 1:02 PM

Keep on Hoping this will Change while we’re all alive
It won’t, but they keep on hoping – that’s all they’ve got!

Chip on August 3, 2010 at 1:14 PM

Private wage and salary disbursements decreased $5.2 billion in June, in contrast to an increase of $19.2 billion in May.

Either a whole bunch of people got their pay and/or hours cut, or we are in for a very depressing jump in the overall unemployment number.

Oh, just to point out, these numbers have been cooked upward nearly every single month by the Fed since January 2009 when they are first released, and they are invariably revised down significantly each month. As depressing as these numbers are, they are going to be revised downward a few times, and that will make them truly horrific.

Johnnyreb on August 3, 2010 at 1:15 PM

I’ll have a Double Dip please, with extra misery.
Bat Chain Puller on August 3, 2010 at 1:14 PM

With a side order of Malaise.

Chip on August 3, 2010 at 1:16 PM

Remind all that Obama is ‘driving’ the car, and holds the keys. He’s fond of saying so.

Schadenfreude on August 3, 2010 at 1:17 PM

Meanwhile, private sector wages dropped while overall wages remained stagnant, according to a second report released today:

add in unemplyment and you have major DEFLATION occurring on the wage front while major inflation occurring on the producer side which means that demand will be destroyed. Until the producer side starts having deflation we will not have a recovery.

unseen on August 3, 2010 at 1:20 PM

After his triumphant recovery tour of the nation President Obama will be stopping in New York to welcome the Titanic on the successful conclusion of its maiden voyage across the Atlantic.

jl on August 3, 2010 at 1:20 PM

The O’s response: I blame Booosh!

JimK on August 3, 2010 at 1:21 PM

Disposable personal income (DPI) — personal income less personal current taxes — increased $5.1 billion

Who’s getting the money? The middle and lower class folks have seen steady erosion in their wages since 2002, while the cost of everything has continued to rise.

I agree with the posters above. Someone needs to send Turbo Timmy the memo, by messenger and make him sign for it.

dogsoldier on August 3, 2010 at 1:25 PM

I just read last nights “Grape Vine” from Special Report. We should be glad to know that we aren’t the only people he is “above”. People paid $30K to eat dinner with him and he ate privately with two of his aides. I think that’s interesting.

Cindy Munford on August 3, 2010 at 1:26 PM

Someone needs to tell Turbo Tax Timmy.

Disturb the Universe on August 3, 2010 at 12:57 P

This is not what Mr. Geitner says.

Cindy Munford on August 3, 2010 at 12:57 PM

Tim Geitner don’t say that!

fourdeucer on August 3, 2010 at 12:58 PM

…right on target……

(via Drudge)
http://abcnews.go.com/GMA/treasury-secretary-timothy-geithner-unemployment/story?id=11308157


But amid that bad news, Geithner said, were signs of growth in the private sector.

“If you look at the numbers last week that tell you what’s happening to the economy as a whole, what they showed is the private sector is getting stronger. So if you’d add together business investment and consumption, that part of the economy, which is what matters for the future, is getting progressively stronger and that’s very important,” Geithner said.

This whole administration is totally dependent on the journolister’s who lap up their every word and spread their talking points without the slightest acknowledgement of the reality on the ground.

Geithner is,and always has been, a lying con man that was right in the middle of the massive corruption that brought this economy down.
The fact the he is the Treasury secretary shows how illegitimate the Obama administration is.

Baxter Greene on August 3, 2010 at 1:27 PM

your tax dollars at work

ConservativePartyNow on August 3, 2010 at 1:10 PM

I skimmed all 100. Truly amazing. This report needs to go viral.

carbon_footprint on August 3, 2010 at 1:27 PM

Anyone who doesn’t absolutely hate this country, will turn out and vote against Democrats this fall.

Democrat politicians such as our corrupt, ignorant and incompetent idiot of a president are the #1 problem vexing our nation.

And really, all other issues are tied to the inane, far-left policies of the Democrat Party.

Solve the largest turd in the punchbowl, Democrat Party scum and everything else will fall into place neatly.

NoDonkey on August 3, 2010 at 1:29 PM

November 2nd can’t get here fast enough.

Ward Cleaver on August 3, 2010 at 1:35 PM

Strategy for getting the USA out of debt:

Auction off chances to knock that smug look off “somebody’s” face.

AubieJon on August 3, 2010 at 1:35 PM

Can’t wait for the numbers when socialism finally takes complete control.

Are the Republicans awake at all?

moonsbreath on August 3, 2010 at 1:36 PM

But, but, but… Tim Geithner said he’s saved 8.5 million jobs!!!!! (Yes, that is an EIGHT, not a typo)

ButterflyDragon on August 3, 2010 at 1:36 PM

Bears repeating:

BHO – Most intelligent president evah!

GrannyDee on August 3, 2010 at 1:39 PM

I am sure I have mentioned this before but when you get unemployment you get to go to a meeting on how to lie. Anyway, here in northern Florida they tell you that your starting pay request should be $8 per hour.

Cindy Munford on August 3, 2010 at 1:41 PM

Help the country, buy a Volt-wagon.

Dhuka on August 3, 2010 at 1:46 PM

Still hoping Geithner is gone before his name appears on US currency.

tomg51 on August 3, 2010 at 1:46 PM

I’ll have a Double Dip please, with extra misery.
Bat Chain Puller on August 3, 2010 at 1:14 PM

With a side order of Malaise.

Chip on August 3, 2010 at 1:16 PM

Ya’ll sound like a really bad cooking show for demons.

GnuBreed on August 3, 2010 at 1:47 PM

So, as it turns out, what is ultimately needed to really start a recovery is for labor costs to fall. Which means that either government has to back off of costly regulation and payroll taxes, or wages need to fall — and we are going to stall in the doldrums until that happens, either directly or through inflation.

Count to 10 on August 3, 2010 at 1:49 PM

Nothing to fear. We are well on our way. It’s “Recovery Summer”!

November can’t come soon enough!

GarandFan on August 3, 2010 at 2:19 PM

The economists are in the summer doldrums. They have run out of new ways to spin bad economic news.

seven on August 3, 2010 at 2:34 PM

I am shocked! Yes, Shocked!
At bad economic news…
How unexpected!

Haiku Guy on August 3, 2010 at 2:41 PM

Anyway, here in northern Florida they tell you that your starting pay request should be $8 per hour.

Cindy Munford on August 3, 2010 at 1:41 PM

In CA that’s minimum wage!

Mary in LA on August 3, 2010 at 3:02 PM

Marx (in Urkel voice): “Did I do that?”

faraway on August 3, 2010 at 3:33 PM

Still hoping Geithner is gone before his name appears on US currency.

tomg51 on August 3, 2010 at 1:46 PM

Not me! I have my red lettered “Tax Cheat” stamp ready to stamp across his sorry name for all to see.

txhsmom on August 3, 2010 at 4:13 PM

Can anyone say Obama’s a double dip stick yet?

chickasaw42 on August 3, 2010 at 6:01 PM

So, as it turns out, what is ultimately needed to really start a recovery is for labor costs to fall.

Count to 10 on August 3, 2010 at 1:49 PM

True, but it isn’t wages that are to blame. We’ve already got an increasing number of people being paid under the table in cash and it isn’t helping recover one bit. Breaking the law is a just survival measure borne out of desperation.

What is needed are more people getting paid, for anything useful at all. But the Obama administration can’t even match up to FDR’s efforts for crying out loud! Even the most staunch Keynesian economist could see the pointlessness of the “one man digs a hole, another fills it up” kind of work he’s ‘saving or creating’.

Dark-Star on August 3, 2010 at 10:02 PM