Manufacturing tanks in August

posted at 10:12 am on October 4, 2010 by Ed Morrissey

Until Joe Biden started selling “Recovery Summer,” manufacturing had been one of the few areas in which Americans could take hope that the recession had truly ended.  August’s numbers, released a few minutes ago by the Census Bureau, continued the bad news that started in late spring with a sharp downturn in demand.  New orders and shipping both dropped significantly in August, making it the third month of declines in four months:

New orders for manufactured goods in August, down three of the last four months, decreased $2.2 billion or 0.5 percent to $408.9 billion, the U.S. Census Bureau reported today. This followed a 0.5 percent July increase. Excluding transportation, new orders increased 0.9 percent. Shipments, also down three of the last four months, decreased $2.5 billion or 0.6 percent to $415.1 billion. This followed a 1.2 percent July increase. Unfilled orders, down following four consecutive monthly increases, decreased $0.1 billion to $804.0 billion. This followed a slight July increase. The unfilled orders-to-shipments ratio was 5.59, up from 5.53 in July. Inventories, up seven of the last eight months, increased $0.7 billion or 0.1 percent to $526.4 billion. This followed a 0.9 percent July increase. The inventories-to-shipments ratio was 1.27, up from 1.26 in July.

This follows a bad report on durable goods from ten days ago.  This covers all of the manufacturing sector, of which durable goods is a significant part, so this shouldn’t come as a total surprise to anyone.

The outlook doesn’t look bright, either.  Inventories rose again, this time up 0.4%, which will tend to depress new orders in coming months. It will also force retailers to discount merchandise more heavily, eroding profits and limiting job creation, although for consumers with cash, it’s good for bargain hunting.  The backlog shrunk again as unfilled orders dropped slightly.  On the plus side, shipments of non-durable goods rose in August.

For some other mildly good news, the housing market stabilized a little in August:

Pending sales of previously owned U.S. homes rose more than expected in August to a four-month high, indicating the housing market was regaining some stability after recent steep declines.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in August, increased 4.3 percent to 82.3 from July.

It was the second straight month of gains in the index, which leads existing home sales by a month or two. July contracts were revised down to show a 4.5 percent increase instead of the previously reported 5.2 percent rise.

Bear in mind that these sales dropped by double-digit percentages over the summer.  This is a bounce back from the bottom, but that doesn’t make this bad news.  We may, after having finally rid ourselves of gimmicky government interventions, finally reached a rational level of sales and valuation.  When more sales data gets released, we’ll know whether homeowners can finally breathe easier.


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Damn, from the headline I thought I might get to see some military pr0n of new armor designs.

Could it be the fact that Congress still hasn’t acted on extending the tax cuts have a teeny bit to do with it?

The Monster on October 4, 2010 at 10:25 AM

One month…just one month to go…

right2bright on October 4, 2010 at 10:26 AM

One month…just one month to go…

right2bright on October 4, 2010 at 10:26 AM

right2bright:Yup…tick..tick..to D-Day,er,V-Day!:)

canopfor on October 4, 2010 at 10:28 AM

With record unemployment…who will buy these durable goods.
There is only one cure for our economy…reducing drastically unemployment.
If the president had any clue, he would have demanded that all of congress stay in session, and the only bills passed would have had to do with lowering unemployment.
No one should be talking about anything except how to get people back to work…how to give incentives for business to hire and start producing.

right2bright on October 4, 2010 at 10:29 AM

What’s so unusual about manufacturing tanks in August? Yes, it’s very hot in August, but we still need a steady supply of….

Oh, that’s different. Never mind.

NeighborhoodCatLady on October 4, 2010 at 10:33 AM

With each passing week an additional 450,000 people file for unemployment. People are frighted, angry and cinching their purses tight until things improve. They are not buying what they don’t need.

The few folks who are spending aren’t buying a lot. And the congress took early vacation. Must be nice.

dogsoldier on October 4, 2010 at 10:34 AM

It seems as if they (the dims) want to loose so they can blame their mess on the Republicans.Never take responsibility is their motto.

Nunquam exsisto officium

Col.John Wm. Reed on October 4, 2010 at 10:37 AM

Ok Iam not the only one that was thinking military tanks not the other tanks.

Cookies Mom on October 4, 2010 at 10:38 AM

There is another downside that is rarely mentioned. Core competency employees in these industries are expected to take up the slack, created by layoffs. The level of productivity is expected to be maintained or increase in some instances. This is usually sustainable in the short term, but in the relative long term, burnout occurs with all of its associated problems.

midlander on October 4, 2010 at 10:44 AM

Bear in mind that these sales dropped by double-digit percentages over the summer. This is a bounce back from the bottom, but that doesn’t make this bad news.

Ed

True and proper perspective. But emphasis on history and mathematics: housing was hyper-inflated by irresponsible government action and a market mechanism gone mad; the industry endured a historically unprecedented deflation (which made the late 1980s bubble-burst look mild by comparison) to correct this over-inflation; and the economy is crouched to pounce on any sign that it is over and we can all get back to work.

So, mild increases or even stability in the housing market is long, long overdue and the absence of a strong increase in housing starts and values of existing homes is only a further indictment of this anti-business administration, imo.

Then again…I hate them.

Jaibones on October 4, 2010 at 10:45 AM

We may, after having finally rid ourselves of gimmicky government interventions, finally reached a rational level of sales and valuation. When more sales data gets released, we’ll know whether homeowners can finally breathe easier.

I can only imagine that there is a ton of housing inventory that is fit to sell and sell fast. Hopefully that’ll get moving at sometime.

ted c on October 4, 2010 at 10:50 AM

Manufacturing tanks in August

Who was manufacturing tanks in August, and for what purpose? Wasn’t it August when Boris Yeltsin attacked the Duma (Russian parliament) with tanks? Is Obama manufacturing tanks to attack the Capitol before the midterms?

(/sarc)

Steve Z on October 4, 2010 at 10:51 AM

Housing is at the bottom … at least it isn’t going through the bottom.

tarpon on October 4, 2010 at 10:54 AM

With each passing week an additional 450,000 people file for unemployment. People are frighted, angry and cinching their purses tight until things improve. They are not buying what they don’t need.

The few folks who are spending aren’t buying a lot. And the congress took early vacation. Must be nice.

dogsoldier on October 4, 2010 at 10:34 AM
-
Went to the diner Sat night at 10:00… 90% empty. The place use to be packed at that time. Looks like a night out no longer ends with a snack at the Palace.

RalphyBoy on October 4, 2010 at 10:55 AM

I had hoped this was going to be a thread about the M-1 Abrams

pseudonominus on October 4, 2010 at 10:56 AM

How much has the temporary foreclosure stall contributed to the housing numbers? Three major lenders, multiple states, with more sure to follow. Doesn’t that decrease the number of previously owned homes entering the market?

BKeyser on October 4, 2010 at 11:11 AM

Sure wish the F-22 production line was operational. We may need those fighters in the future. Thanks for nothing, Obama.

NaCly dog on October 4, 2010 at 11:20 AM

RalphyBoy on October 4, 2010 at 10:55 AM

I took Mrs Dog out for dinner a couple weeks ago to the local swank Italian place nearby, always mobbed for dinner (the food is really great), we were the only ones there.

dogsoldier on October 4, 2010 at 11:23 AM

RalphyBoy on October 4, 2010 at 10:55 AM

I took Mrs Dog out for dinner a couple weeks ago to the local swank Italian place nearby, always mobbed for dinner (the food is really great), we were the only ones there.

dogsoldier on October 4, 2010 at 11:23 AM

Every month, it seems, a new restaurant goes out of business here in Wilmington, NC.
Business owners are beginning to realize that competition is great…it means lots of business and opportunities.
But this is the second or third wave of closing…the first was just poor management, now businesses are closing because of lack of customers.

right2bright on October 4, 2010 at 11:34 AM

Sure wish the F-22 production line was operational. We may need those fighters in the future. Thanks for nothing, Obama.

NaCly dog on October 4, 2010 at 11:20 AM

Remember when Perfesser of Economics Bammie snidely instructed is that “all spending is stimulation”? Somehow military spending is always excepted.

slickwillie2001 on October 4, 2010 at 11:35 AM

So when do we get a building of inventory in firearms and discounts having to go through the retail outlets?

Hey! Stop laughing! One can dream, can’t they?

ajacksonian on October 4, 2010 at 12:49 PM

Whew. For a minute there, I thought the title was a reference to people nmanufacturing armored tanks in the month of August.

It did seem like a promising opening.

J.E. Dyer on October 4, 2010 at 12:59 PM

We may, after having finally rid ourselves of gimmicky government interventions, finally reached a rational level of sales and valuation. When more sales data gets released, we’ll know whether homeowners can finally breathe easier.

Nope. July and August are the two best months every year for home sales. People who can plan their moves or are making in-city moves do so in these months to get their kids settled before school starts.

Yes, we had huge drops the previous two months, but the only thing that kept July and August from being drops is the “back to school” phenomenon. When we sold our last house, every realtor told us this.

PastorJon on October 4, 2010 at 1:02 PM

right2bright:Yup…tick..tick..to D-Day,er,V-Day!:)

canopfor on October 4, 2010 at 10:28 AM

Or maybe R-Day…
or C-Day…
Nope, I’ve got it — T-Day! :-)

Mary in LA on October 4, 2010 at 1:03 PM

Manufacturing down,leading to rising unemployment while pending homes sales rise.Sounds to me like the perfect way to guarantee future home forclosures.Or am I missing something?
Here in Pa. it is very difficult for a pending buyer to void a real estate contract,so those who are about to become un- or underemployed are locked into mortgages they won’t be able to afford.

DDT on October 4, 2010 at 1:06 PM

Too bad they weren’t manufacturing tanks (and F-22s) it might have stimulated the economy.

agmartin on October 4, 2010 at 1:18 PM

Inventories tend to start rising this time of year in preparation for Christmas sales. So is this accumulation for December? Or just general lack of demand? We will know in a couple of months.

MSimon on October 4, 2010 at 2:03 PM

Wait ’til California’s AB32 kicks in starting in 2013, and destroys all manufacturing in that state. Then depression will become the new norm.

theCork on October 4, 2010 at 10:43 PM