Manufacturing orders fall 0.9% in October, durable goods down 3.4%

posted at 11:35 am on December 3, 2010 by Ed Morrissey

Perhaps now we know why unemployment unexpectedly rose in November.  Confirming a durable-goods report from two weeks ago, the Commerce Department reported that the indicator slid 3.4% in October, up from the initial report of 3.3%.  Overall, manufacturing declined 0.9% for the month, and the inventory outlook doesn’t give much hope of immediate improvement:

New orders for manufactured goods in October, down following three consecutive monthly increases, decreased $3.6 billion or 0.9 percent to $420.1 billion, the U.S. Census Bureau reported today. This followed a 3.0 percent September increase. Excluding transportation, new orders decreased 0.2 percent. Shipments, up three of the last four months, increased $1.5 billion or 0.3 percent to $421.0 billion. This followed a 0.7 percent September increase. Unfilled orders, up nine of the last ten months, increased $5.2 billion or 0.6 percent to $821.6 billion. This followed a 1.3 percent September increase. The unfilled orders-to-shipments ratio was 5.76, up from 5.67 in September. Inventories, up nine of the last ten months, increased $4.7 billion or 0.9 percent to $538.2 billion. This followed a 1.1 percent September increase. The inventories-to-shipments ratio was 1.28, up from 1.27 in September.

New orders for manufactured durable goods in October, down two of the last three months, decreased $6.9 billion or 3.4 percent to $195.7 billion, revised from the previously published 3.3 percent decrease. This followed a 4.9 percent September increase. Transportation equipment, also down two of the last three months, had the largest decrease, $2.8 billion or 5.2 percent to $52.3 billion. New orders for manufactured nondurable goods increased $3.2 billion or 1.5 percent to $224.4 billion….

Inventories of manufactured durable goods in October, up ten consecutive months, increased $1.5 billion or 0.5 percent to $316.9 billion, revised from the previously published 0.4 percent increase. This followed a 0.7 percent September increase. Machinery, up eight consecutive months, had the largest increase, $0.5 billion or 0.9 percent to $52.4 billion. Inventories of manufactured nondurable goods, up three of the last four months, increased $3.2 billion or 1.5 percent to $221.3 billion. This followed a 1.7 percent September increase. Petroleum and coal products, also up three of the last four months, led the increase, up $1.6 billion or 3.6 percent to $44.7 billion. By stage of fabrication, October materials and supplies increased 0.4 percent in durable goods and 1.0 percent in nondurable goods. Work in process increased 0.4 percent in durable goods and 2.8 percent in nondurable goods. Finished goods increased 0.5 percent in durable goods and 1.2 percent in nondurable goods.

When orders drop and inventories rise, that’s a sign of long-term trouble for manufacturing.  The sellers will have to discount more heavily to clear inventory, which will leave them with less profit for future orders and a longer cycle time between orders.  Manufacturers will have to slow production, which at the least means a reduction in new jobs created, and could mean layoffs if the cycle continues long enough.

The earlier report had hinted at a significant slowdown in overall manufacturing.  In this case, it’s worth noting that while transportation was again an overall drag on the numbers, it wasn’t the entire problem in October either.  Even without transportation, manufacturing dropped 0.2% overall.  Nondurable goods (items not expected to last five years or more) had a small increase of 1.5%, but the numbers were overwhelmed by the durable goods drop more than 2:1, due to the higher prices durable goods carry.

These numbers show an economy in stagnation, with no real momentum in any direction.  Manufacturing had been the one bright spot in the economy in the post-Great Recession period, and it’s now aimless.  It has the same problem as the rest of the economy — an uncertain regulatory and investment future, with buffeting from short-term gimmicky interventions that has made business planning nearly impossible.


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Ya BUTT we should ignore this one time bit of data because it’s volatile. One data point doesn’t make a trend, and the trend is your friend, so just ignore it….nothing to see here.

Skandia Recluse on December 3, 2010 at 11:39 AM

Double dip? Triple dip?

Khun Joe on December 3, 2010 at 11:40 AM

This reminds me of my race bike. The electrical system goes to shiite and by the time I figure it out, the tires have gone flat. By the time I get the tires to proper trim, the coolant starts leaking. When I get the radiator plugged, the electrical system goes bad again.

Bishop on December 3, 2010 at 11:40 AM

Unexpected….cough….

TiminPhx on December 3, 2010 at 11:40 AM

S**t
I do want things to get better.
No matter how much I reject the current approaches.

tomg51 on December 3, 2010 at 11:40 AM

Merry Christmas

Vashta.Nerada on December 3, 2010 at 11:41 AM

Endless bummer.

Transitioning seamlessly to Winter of Discontent.

steveegg on December 3, 2010 at 11:42 AM

S**t
I do want things to get better.
No matter how much I reject the current approaches.

tomg51 on December 3, 2010 at 11:40 AM

Who doesn’t want things to get better? The problem is that we are stuck for the most part watching Obama try all the liberal approaches–which won’t work in the long run.

BuckeyeSam on December 3, 2010 at 11:44 AM

But the stock market went up a gazillion points this week which the MSM interpreted as good times ahead. What happened?

angryed on December 3, 2010 at 11:44 AM

When orders drop and inventories rise, that’s a sign of long-term trouble for manufacturing. The sellers will have to discount more heavily to clear inventory, which will leave them with less profit for future orders and a longer cycle time between orders.

Well at least that means there may be some good bargains to be had this Christmas.

Doughboy on December 3, 2010 at 11:44 AM

Obama, Democrats = Epic Fail!

SPGuy on December 3, 2010 at 11:45 AM

But the stock market went up a gazillion points this week which the MSM interpreted as good times ahead. What happened?

angryed on December 3, 2010 at 11:44 AM

The market is measured in dollars, which are losing their value. It isn’t that the companies’ stocks are worth more, it is that the dollar is worth less.

Vashta.Nerada on December 3, 2010 at 11:46 AM

These numbers show an economy in stagnation, with no real momentum in any direction.

Not true Ed. these numbers show an economy in delcine being artifically propped up by massive governmental intervention and as soon as that intervention is taken away the economy wants to continues its downward path.

the problem continues to be a demand led recession. The government gave vast sums of money to the producers so they produced. however the buyers don’t have enough money/wealth to buy their products thus inventories build.

the only solution to the economic problems is deflation. which means a lot of rich people will lose a lot of their wealth.

unseen on December 3, 2010 at 11:47 AM

Mission Accomplished.
/.

joepub on December 3, 2010 at 11:48 AM

Count it!

crr6 on December 1, 2010 at 9:38 AM

SHARPTOOTH on December 3, 2010 at 11:48 AM

The market is measured in dollars, which are losing their value. It isn’t that the companies’ stocks are worth more, it is that the dollar is worth less.

Vashta.Nerada on December 3, 2010 at 11:46 AM

Isn’t there a name for that, when dollars aren’t able to buy as much?

And isn’t there a name for the combination of an economy that is growing painfully slowly (or not at all) combined with the dollar losing value?

And didn’t we have an infamously inept President who Presided over the last such period?

hawksruleva on December 3, 2010 at 11:49 AM

Is it normal for a report on bad October numbers to spend so much time on better numbers from September or the “previous three months”? The 3 paragraphs exerpted use the phrase “September increase” twice as often as the word “October”, and it’s an October report.

forest on December 3, 2010 at 11:51 AM

the only solution to the economic problems is deflation. which means a lot of rich people will lose a lot of their wealth.

unseen on December 3, 2010 at 11:47 AM

Wouldn’t deflation mean that dollars would be worth more? Now if you’re talking about the deflation of the economic bubbble, that’s different.

hawksruleva on December 3, 2010 at 11:51 AM

This is only a fin knifing through the water. The rest of the shark is that fact that when Americans buy durable goods, they shop for value (Quality/Price)… meaning that they frequently buy from overseas manufacturers or U.S. brands manufactured overseas, because of lower wage costs baked into the cost of the finished products.

So, in effect, we’re borrowing money from China to purchase goods made in China… because American labor unions, environmental lobbies, and government overregulation have made it impossible to manufacture them here. And we wonder why the unemployment numbers never get better?

VastRightWingConspirator on December 3, 2010 at 11:51 AM

These numbers show an economy in stagnation, with no real momentum in any direction.

Invest in the sweater industry.
~J. Carter, 1978

BobMbx on December 3, 2010 at 11:51 AM

Vashta.Nerada on December 3, 2010 at 11:46 AM

I was being facetious, but yes you’re exactly right. Dow up 10%, everyone throws a party. MSM goes wild with praise on Obama. Except that everything now costs 11% more than it used to. But don’t confue the masses with the facts.

angryed on December 3, 2010 at 11:52 AM

These numbers show an economy in stagnation, with no real momentum in any direction.

And once the inevitable QE3 sets sail, prepare for stagflation.

steveegg on December 3, 2010 at 11:53 AM

September increase” twice as often as the word “October”, and it’s an October report.

forest on December 3, 2010 at 11:51 AM

Sept was the month the Obama government influxed a large amount of money to improve the economy before the election

unseen on December 3, 2010 at 11:56 AM

I guess recovery winter has been canceled. At least we have recovery summer to look forward to.

tarpon on December 3, 2010 at 11:57 AM

S**t
I do want things to get better.
No matter how much I reject the current approaches.

tomg51 on December 3, 2010 at 11:40 AM

It’s worth remembering that the reason why conservatives don’t like the current approaches is fact-based. We oppose Obama’s policies because they don’t work. We oppose taking on debt in an attempt to shove our economic problems down the road. We oppose paying people to not work. We oppose taking money from innovative people who want to create opportunities for themselves and others. We oppose catering to unions at the expense of students, consumers, and taxpayers.

The economy is the living, urgent, constant proof that big-government policies hurt U.S. citizens.

hawksruleva on December 3, 2010 at 11:57 AM

Turn out the lightw
The Party’s over
They say that all
Good things must end

darwin-t on December 3, 2010 at 11:58 AM

s/b lights

darwin-t on December 3, 2010 at 11:58 AM

unseen on December 3, 2010 at 11:47 AM

It’s going down anyway. They are proping it up and trying desperately to hide the decline. Fortunately they can’t hide it any more.

Reports emerged last week that ODumbAss trips out every time a bad report is issued.

The reports of improvements in manufacturing in the previous quarter are dubious, since every single stat put out by the ministry of truth have actually been like factually incorrect.

How many “adjustments” can they make to the unemployment stats?

Anyway, the snowball continues to roll down hill, gathering mass and velocity.

dogsoldier on December 3, 2010 at 12:01 PM

It has the same problem as the rest of the economy — an uncertain regulatory and investment future, with buffeting from short-term gimmicky interventions that has made business planning nearly impossible

atlas. shrugging.

ted c on December 3, 2010 at 12:02 PM

Reports emerged last week that ODumbAss trips out every time a bad report is issued.

The reports of improvements in manufacturing in the previous quarter are dubious, since every single stat put out by the ministry of truth have actually been like factually incorrect.

How many “adjustments” can they make to the unemployment stats?

Anyway, the snowball continues to roll down hill, gathering mass and velocity.

dogsoldier on December 3, 2010 at 12:01 PM

He made an unannounced trip Afghanastan for appearances.

darwin-t on December 3, 2010 at 12:03 PM

This reminds me of my race bike. The electrical system goes to shiite and by the time I figure it out, the tires have gone flat. By the time I get the tires to proper trim, the coolant starts leaking. When I get the radiator plugged, the electrical system goes bad again.

Bishop on December 3, 2010 at 11:40 AM

Except the analogy break down because you actually know how to fix all those things, but the Obama-Geithner team doesn’t know how to fix anything about the economy.

jwolf on December 3, 2010 at 12:04 PM

I guess recovery winter has been canceled. At least we have recovery summer to look forward to.

tarpon on December 3, 2010 at 11:57 AM

Gah! Not another recovery summer! Noooo!

Key West Reader on December 3, 2010 at 12:06 PM

Anyway, the snowball continues to roll down hill, gathering mass and velocity.

dogsoldier on December 3, 2010 at 12:01 PM

yeap if the elites would have allowed deflation to occur when the recession first started it would have been a short sharp decrease in price and employment would have rebounded. But they had to save us from ourselves…

unseen on December 3, 2010 at 12:09 PM

This reminds me of my race bike. The electrical system goes to shiite and by the time I figure it out, the tires have gone flat. By the time I get the tires to proper trim, the coolant starts leaking. When I get the radiator plugged, the electrical system goes bad again.

Bishop on December 3, 2010 at 11:40 AM

“But, the bike was working for a while back in September, so it kinda evens out, right?” – Commerce Department report on your bike

forest on December 3, 2010 at 12:12 PM

At this point, the only way for things to get better is for the entire system to collapse….I just don’t see any other way out.

-The fed is in a box (liquidity trap)
-The government is turning facist
-The sheeple are more concerned about Black Friday and buying inferior cheap plastic crap from China than what is happening to them on a daily basis.

PatriotRider on December 3, 2010 at 12:14 PM

yeap if the elites would have allowed deflation to occur when the recession first started it would have been a short sharp decrease in price and employment would have rebounded. But they had to save us from ourselves…

unseen on December 3, 2010 at 12:09 PM

Looking at Japan and every other modern economy that’s been hit with deflation during the past 20 years, the outcome has never been that positive. I mean, I hear what you’re saying but it’s based on theory that simply never pans out in the real world. If prices could only take a sharp fall to address slacking demand, that would be great. If not for all the other consequences that kill an economy, I’d be cheerleading for deflation.

bayam on December 3, 2010 at 12:15 PM

yeap if the elites would have allowed deflation to occur when the recession first started it would have been a short sharp decrease in price and employment would have rebounded. But they had to save us from ourselves…

unseen on December 3, 2010 at 12:09 PM

yep, and now we have cronic stagnation following an acute recession, aka a “depression“.

forest on December 3, 2010 at 12:19 PM

Stagflation, recession, trouble with Iranian nutjobs … this seems strangely familiar. All we need now is a disco craze.

OhioCoastie on December 3, 2010 at 12:25 PM

Looking at Japan and every other modern economy that’s been hit with deflation during the past 20 years, the outcome has never been that positive. I mean, I hear what you’re saying but it’s based on theory that simply never pans out in the real world. If prices could only take a sharp fall to address slacking demand, that would be great. If not for all the other consequences that kill an economy, I’d be cheerleading for deflation.

bayam on December 3, 2010 at 12:15 PM

Bayam. Japan tried for 20 years to fight deflation and 20 years later they are seeing delfation occur. deflation/inlfation is the ying/yang of the free market. Prices must go up and they must come down. It is the free market’s way to redisturb resources and change prioities. You can not have a free market economy without allowing deflation to occur. You have stagflation which is just another way of saying the government printing money is keeping the economy from finding its level.

the point to take from Japan is their effort to fight deflation for 20 years did nothing to stop the deflation in the end and placed them in so much debt they are unable to function.

Its the same mentality that thinks it can stop climate change if it is occurring. the goal should not be to stop it but to soften its impact. The same can be said for deflation.

You can not have rags to riches without a pathway fro richies to rags. You can not take the negative away from the cycle and expect the cycle to work.

unseen on December 3, 2010 at 12:26 PM

yep, and now we have cronic stagnation following an acute recession, aka a “depression“.

forest on December 3, 2010 at 12:19 PM

which will make the coming deflation 10 times worse which will tell all the elites “that deflation must be fought at all costs in the future” lather rinse repeat.

unseen on December 3, 2010 at 12:29 PM

And Congress’ best remedy? Hey, let’s print more money!!

Yeah, that’s working GREAT. Like the man said, buy some sweaters and stock up on canned goods. This is going to get ugly.

NTXLass on December 3, 2010 at 12:36 PM

when Americans buy durable goods, they shop for value (Quality/Price)… meaning that they frequently buy from overseas manufacturers or U.S. brands manufactured overseas, because of lower wage costs baked into the cost of the finished products.

Rereading this, and thinking it through, our most recent purchases were:

- LG refrigerator (Korea)
- Samsung washer and dryer (Korea)
- Sony TV (Japan)
- Samsung BluRay player (Korea)
- Cuisinart coffee maker (U.S. brand… manufactured?)

… and my wife is test-driving a new Acura today. The are U.S. alternatives to all of these products; but they offer fewer features and appear to be inferior in terms of quality. I refused to buy an imported car for 30 years; now, I would almost refuse to buy an “American-made” one, if there is still such a thing.

VastRightWingConspirator on December 3, 2010 at 12:38 PM

Hey, wingnuts-the recession was over in summer 2009.

Wingnuts.

-Your Obama crotch sniffing media betters.

Dr. Carlo Lombardi on December 3, 2010 at 12:42 PM

Reports emerged last week that ODumbAss trips out every time a bad report is issued.
dogsoldier on December 3, 2010 at 12:01 PM

At first, I thought you were talking about Obama’s love for Air Force One and his impromptu trip to Afghanistan. I thought, well at least he doesn’t bomb aspirin factories everytime a bad report is issued, lol.

Though, I don’t know which is worse.

Fallon on December 3, 2010 at 12:58 PM

our best bet is to unionize!

joeindc44 on December 3, 2010 at 1:00 PM

Just wait until January and February.

With a severe winter coming, depressing construction, and layoffs of temps in retail, we can have 10%+ unemployment.

That is unless Obama can convince another million people to drop out of the labor force.

txdoc on December 3, 2010 at 1:05 PM

Why would anyone call this a “double dip”? As far as I can tell, we never came out of the first one. We had a bit of a “dead cat bounce” but that was it (i.e. if you throw a dead cat off a building, it will still bounce once when it hits the ground, it doesn’t mean that it is going to go all the way back up to the roof again).

As the economy dropped, there was a little bit of overshoot and it did recover just a tiny bit, but that is all it was; a dead cat bounce.

We are still in the first dip, it is just getting ready to get a little deeper.

crosspatch on December 3, 2010 at 1:07 PM

VastRightWingConspirator on December 3, 2010 at 12:38 PM

The Acura might be made here. Still non-union I think.

forest on December 3, 2010 at 1:25 PM

an uncertain regulatory and investment future

Guess we’ll have to wait for the new Congress. You know, the one that actually gives a damn about the economy.

GarandFan on December 3, 2010 at 1:26 PM

Fallon on December 3, 2010 at 12:58 PM

LOL I should avoid slang, I guess. I read several reports from internal WH leaks that he really gets “unhinged” (their words not mine) every time a bad economic report comes out. When I read that I wondered if he throws ash trays or what? Does he get angry and snippy?

“Unhinged” sounds more like he rants and rages.

txdoc on December 3, 2010 at 1:05 PM

It’s over 17% if one looks at the U6 unemployment number. Shadowstats.com has something closer to reality at 22% based on everything I’ve read on teh subject.

dogsoldier on December 3, 2010 at 1:27 PM

Oh and this is related. No action on the tax hikes may cause a market crash. This is a bit of a “no duh,” isn’t it?

http://politics.usnews.com/news/blogs/washington-whispers/2010/12/2/delaying-tax-vote-could-crash-stock-market.html

Investors WILL pull their cash out by 12/15. No is ands buts or maybes.

dogsoldier on December 3, 2010 at 1:37 PM

/Ivy League graduate mode on

Now would be a great time for a tax increase on “millionaires” that make as little as $125,000 per year, right?

/Ivy League graduate mode off

MNHawk on December 3, 2010 at 3:35 PM

Obama, Democrats = Epic Fail!Flail!

SPGuy on December 3, 2010 at 11:45 AM

chickasaw42 on December 3, 2010 at 3:54 PM

To the McCain voters now on the unemployment line. I’m truly sorry for your predicament and pray you will find a job soon.

To the Obama voters on the unemployment line. BWAHAHAHAHA!SUCKERS!

MaiDee on December 3, 2010 at 6:00 PM

Obowma: They’ve got me.

Unfortunately, a Jimmah Carter redux.

crosspatch on December 3, 2010 at 1:07 PM

The bounce was the US Gov’t hired census workers through the Summer of Recovery. Many companies are holding cash because they don’t know what’ll happen in January with tax rates, healthcare costs, higher energy prices and the like.

If we cut tax rates, lower business tax rates and lessen oppressive business fees and costs,the economy recovers.

dthorny on December 3, 2010 at 6:14 PM

our best bet is to unionize!

joeindc44 on December 3, 2010 at 1:00 PM

Or be unemployed.

http://gatewaypundit.rightnetwork.com/2010/12/crackpot-pelosi-unemployment-benefits-create-jobs/

dthorny on December 3, 2010 at 6:17 PM

Manufacturing had been the one bright spot in the economy in the post-Great Recession period, and it’s now aimless.

It is not a recession, it is a depression. Also, we are still very much in it- we have never left it.

Theophile on December 4, 2010 at 4:17 PM