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.