Factory orders drop in April across the board

posted at 11:01 am on June 4, 2012 by Ed Morrissey

Want to know why the economy has seen jobs eroding over the last two months?  Today’s report from the Commerce Department on factory orders gives an unpleasant explanation.  Orders fell by 0.6%, the third decline in this area in four months and a demonstration that falling demand is becoming a serious issue:

New orders for manufactured goods in April, down three of the last four months, decreased $2.9 billion or 0.6 percent to $466.0 billion, the U.S. Census Bureau reported today. This followed a 2.1 percent March decrease. Excluding transportation, new orders decreased 1.1 percent. Shipments, down following four consecutive monthly increases, decreased $1.5 billion or 0.3 percent to $473.2 billion. This followed a 0.1 percent March increase. Unfilled orders, down following twenty-seven consecutive monthly increases, decreased $0.8 billion or 0.1 percent to $985.4 billion. This followed a slight March increase. The unfilled orders-to-shipments ratio was 6.33, up from 6.29 in March. Inventories, up twenty-two of the last twenty-three months, increased $0.1 billion to $607.2 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.1 percent March increase. The inventories-to-shipments ratio was 1.28, unchanged from March.

Demand fell across the board in April:

New orders for manufactured durable goods in April, down three of the last four months, decreased $0.1 billion to $215.2 billion, revised from the previously published 0.2 percent increase. This followed a 3.7 percent March decrease. Machinery, also down three of the last four months, had the largest decrease, $0.9 billion or 2.9 percent to $31.0 billion. New orders for manufactured nondurable goods decreased $2.9 billion or 1.1 percent to $250.8 billion.

Overall, inventories continue to rise at record levels.  Durable-goods inventories increased 0.3% even while sales dropped slightly in that category.  Shipments increased significantly, 0.6% in durable goods alone, which means that there are lower backlogs of orders to fill.  That combination will depress factory activity in the near term, perhaps all summer long, especially if demand doesn’t rebound.

Reuters calls this report a “surprise,” and notes that March’s numbers got revised downward as well:

New orders for U.S. factory goods fell in April for the third time in four months as demand slipped for everything from cars and machinery to computers, the latest worrisome sign for the economic recovery.

The Commerce Department said on Monday orders for manufactured goods dropped 0.6 percent during the month. The government also revised its estimate for new orders in March to show a steeper decline.

Economists had forecast orders rising 0.2 percent in April.

The report showed broad weakness in a sector that has carried the economic recovery, adding to a growing body of soft economic data.

Oddly, David Axelrod appeared yesterday on CBS’ Face the Nation to argue that manufacturing was the US economy’s bright spot.  So what’s the problem?  According to the mastermind behind the Bain “vampire capitalist” attack strategy that focused on the few failures at the private-equity firm (some not even while Romney worked there), Republicans are “high-fiving” bad economic news for political gain:

While acknowledging that Friday’s job numbers were disappointing, David Axelrod, a top adviser to President Obama, said on Sunday that GOP lawmakers should stop cheering bad news and work with the White House to pass its job proposals.

“Instead of high-fiving each other on days when there is bad news, they should stop sitting on their hands and work on some of these answers,” Axelrod said during an appearance on CBS’s Face the Nation.

Axelrod said while Friday’s job numbers for May, which showed only 69,000 jobs were created, were not good enough, manufacturing continues to be a bright spot. He also argued that problematic sectors such as construction and education could be boosted by Obama’s jobs proposals, which call for increasing funding for infrastructure projects and hiring back laid-off teachers.

“If you look at the jobs report, what was interesting about it, manufacturing up,” Axelrod said. “What was down was construction, what was down was education. The very things that the president has been trying to get the Congress to act on were the things that were down.”

Actually, the House has passed more than a dozen jobs-related bills in this session.  The Democratic-controlled Senate has refused to consider them.  Anyway, the problem in the economy is not that there hasn’t been enough government intervention — it’s that we’ve had too much, in terms of regulatory growth and gimmicky incentives that have distorted the market and created massive ambiguities and uncertainties.  Pointing out that the data supports arguments that the Obama administration has gone in the wrong direction isn’t “high-fiving” bad news, it’s an acknowledgment that the US needs a broad change in economic policy, one which Obama is unwilling or unable to discern.

Update: Don’t expect May’s numbers to improve, either.  Via Jim Pethokoukis, the New York region’s ISM manufacturing index dropped sharply last month:

The manufacturing industry in the New York region showed surprising weakness in May, new data out of the Institute for Supply Management shows.

The key ISM index fell to 49.9 from 61.2 in April, where a reading below 50 indicating contraction. There was no consensus estimate for the May report.

The Institute blamed the fall on declining purchase volumes and a sudden contraction in employment, with 21 percent of businesses reporting a shortage of skilled labor as an impediment to business.

Expectations of economic performance also declined in the May report.


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I wonder when the msm is going to learn how to say and spell…

d.e.p.r.e.s.s.i.o.n?

upinak on June 4, 2012 at 11:05 AM

No surprise… my industry (railroad) is flat and staying flat…

“Thank you, Mister President!”

Khun Joe on June 4, 2012 at 11:05 AM


it’s that we’ve had too much, in terms of regulatory growth and gimmicky incentives that have distorted the market and created massive ambiguities and uncertainties.

A-freaking-MEN!

Weight of Glory on June 4, 2012 at 11:06 AM

How about the thingamajigs for furnaces? Surely, demand must be rising for them.

a capella on June 4, 2012 at 11:06 AM

I wonder when the msm is going to learn how to say and spell…

d.e.p.r.e.s.s.i.o.n?

upinak on June 4, 2012 at 11:05 AM

They’ll start calling it that on February 1, 2013 when President Romney hasn’t fixed it yet…

Khun Joe on June 4, 2012 at 11:07 AM

Hmmm… I could have sworn Marxism was gonna work this time.

mankai on June 4, 2012 at 11:07 AM

“Instead of high-fiving each other on days when there is bad news, they should stop sitting on their hands and work on some of these answers,”

Getting rid of you and your worthless boss seems to be the #1 answer.

#2 is getting rid of Congressional Democrats.

NoDonkey on June 4, 2012 at 11:07 AM

This fits the pattern that we have already seen, and is not surprising. However, it is interesting to note that they revised March down to a -2.1% decline, so April may have actually been an improvement. We already know that the economy slowed in March-May; the question is what will happen this Summer.

TouchdownBuddha on June 4, 2012 at 11:08 AM

If your thinking politically you don’t want it to get too low because if they go up some by the election they can say it is improving…so I think saying republicans want it to be bad is a big stretch. I mean if there are modest gains you can put a decent percentage number on a crap sandwich and package it as a success.

tomas on June 4, 2012 at 11:10 AM

The Misery of Democrat Leadership

Check out Chrissy’s graphs. We’ve seen much of the data before, but her presentation is stunning.

ITguy on June 4, 2012 at 11:10 AM

It’s good to see the 1% who own the factories and other means of production being cut down to size! Now that their ill gotten wealth is vanishing into thin air, they can afford to pay their workers more and offer more benefits. This is good news all around.

JimLennon on June 4, 2012 at 11:15 AM

JimLennon on June 4, 2012 at 11:15 AM

Whoops. I forgot the /OWS tag. Sorry ’bout that.

JimLennon on June 4, 2012 at 11:17 AM

The campaign blamer

cmsinaz on June 4, 2012 at 11:18 AM

More ownership:

Austan Goolsbee (former Obama economic adviser, long gone since last summer):

The president has taken responsibility that we have to do everything we can. It is his number one priority.

Debbie Wasserman Schultz:

We own the economy.

de rigueur on June 4, 2012 at 11:19 AM

“Instead of high-fiving each other on days when there is bad news, they should stop sitting on their hands and work on some of these answers,”

So are they high-fiving or sitting on their hands?

I’m confused.

pain train on June 4, 2012 at 11:20 AM

Reuters calls this report a “surprise,”

And in more breaking news: Water is Wet!

Flora Duh on June 4, 2012 at 11:22 AM

Don’t know about y’all but we’re paying every dang thing off and not even considering any big purchases. Eight year old paid off cars will have to do for awhile. Most of our houses are worth less than we paid for them. There is no certainty on a micro level. Why should they expect any surges at the macro level?

DanMan on June 4, 2012 at 11:23 AM

That combination will depress factory activity in the near term, perhaps all summer long, especially if demand doesn’t rebound.

How can it rebound? With so many out of work, few are buying items they do not need.

with 21 percent of businesses reporting a shortage of skilled labor as an impediment to business.

This is a loathsome lie used to perpetuate the H1-B scam. Our nation has millions of competent capable workers. These folks tend to desire an appropriate wage for their efforts.

Take for example the case of the engineer whose wife confronted Obama about this very issue.

Which reminds me to ask, With the incredible number of unemployed US Citizens why are we importing workers from other countries AT ALL?

Last I checked the US has 5 guest worker programs.

dogsoldier on June 4, 2012 at 11:24 AM

Can you imagine what it would be like if we had a free press?

tom daschle concerned on June 4, 2012 at 11:26 AM

Oh, I forgot, quelle suprise!

dogsoldier on June 4, 2012 at 11:26 AM

If Bloomberg gets his way New York state should see a boom in manufacturing in the coming months.

…………. of 16 oz cups.

fogw on June 4, 2012 at 11:27 AM

So are they high-fiving or sitting on their hands?

pain train on June 4, 2012 at 11:20 AM

Neither. They are twharted by the do-nothing Senate. But the interesting thing is that the filthy Dems can’t be happy that Obama economy is so crappy. It is only a matter of time when they go into full panic mode. Congressional Dems have to run on Obama’s economic record and they can’t be happy about that!!!!

Happy Nomad on June 4, 2012 at 11:28 AM

Can you imagine what it would be like if we had a free press?

tom daschle concerned on June 4, 2012 at 11:26 AM

Wow! That would be awesome. So would an objective main stream TV network. What we have is DNCTV everywhere, except Fox and they have moved left lately too.

dogsoldier on June 4, 2012 at 11:28 AM

My husband works at a garden nursery and usually he works 6 days a week till the end of June, Well they just cut his hrs. to 5 days because sales are down. We are going to be really hurting! We use that overtime to get caught up on our bills from the winter. Thats my reality!!!!!

lisa fox on June 4, 2012 at 11:30 AM

So are they high-fiving or sitting on their hands?

I’m confused.

pain train on June 4, 2012 at 11:20 AM

In my mind Axelrod is notable mostly for his “malapropisms” in mental imagery and his strange metaphors, and not much else.

Still, I’d be willing to venture that all his English profs gave him A’s in college, not due to his illustrative prose, but due to his politics generally agreeing with theirs.

Difficultas_Est_Imperium on June 4, 2012 at 11:31 AM

Can you imagine what it would be like if we had a free an honest press?

tom daschle concerned on June 4, 2012 at 11:26 AM

FIFY… and to answer your question, Obama would be polling 20 points behind Romney…

Khun Joe on June 4, 2012 at 11:34 AM

Dems can’t be happy that Obama economy is so crappy. It is only a matter of time when they go into full panic mode. Congressional Dems have to run on Obama’s economic record and they can’t be happy about that!!!!

Happy Nomad on June 4, 2012 at 11:28 AM

They already are. When they rapid fire excuses three at a time for something they have lost it.

Friday was a total disaster for Zero. The jobs report came out and he attended six fundraisers which probably netted him far less than he expected. Team Zero put out no less than three excuses for the report. During one of the fundraisers Zero suggested $3000 for all to buy thingamajigs and the entire day capped by the contest ad for dinner with Obama and Cruella Deville.

The dems have lost their minds. They knew what the jobs report would look like, yet they still scheduled the fundraisers that day along with the Ad? Wow that’s some masterful planning there.

dogsoldier on June 4, 2012 at 11:34 AM

The Preezy is a double dippy.

JimK on June 4, 2012 at 11:35 AM

On a brighter note, Democrat fundraisers report a booming business in the marketing/sale of crap sandwiches.

NoDonkey on June 4, 2012 at 11:37 AM

Hmmm… I could have sworn Marxism was gonna work this time.

mankai on June 4, 2012 at 11:07 AM

Hang in there, Comrade…maybe next time…if we can get just the right person up there, I’m sure it will work one of these days.

/of course

Dr. ZhivBlago on June 4, 2012 at 11:39 AM

…with 21 percent of businesses reporting a shortage of skilled labor as an impediment to business

which implies their are ‘orders’ waiting to be filled? i.e. demand is there not being met, we have excess DEMAND, explaining the fall? right.

t8stlikchkn on June 4, 2012 at 11:39 AM

Hmmm… I could have sworn Marxism was gonna work this time.

mankai on June 4, 2012 at 11:07 AM

it has always worked, winston. and we’ve always been at war with eastasia.

t8stlikchkn on June 4, 2012 at 11:41 AM

The dems have lost their minds. They knew what the jobs report would look like, yet they still scheduled the fundraisers that day along with the Ad? Wow that’s some masterful planning there.

dogsoldier on June 4, 2012 at 11:34 AM

plouffe and axelturf were handed a layup in 2008. and thought they were michael jordan. and the compliant MSM forwarded the myth of their “prowess” and competency. it was a myth all along. they are the same idiots they were in 08. they just arent being handed the win this time.

t8stlikchkn on June 4, 2012 at 11:43 AM

Let me use the favorite MSM word while reporting these stories UNEXPECTEDLY

stormridercx4 on June 4, 2012 at 11:46 AM

I’ve been unemployed for 2 months now I aint celebrating failure I just want Obama gone.

gsherin on June 4, 2012 at 11:49 AM

It’s McKinley’s fault

mankai on June 4, 2012 at 11:49 AM

…it’s Bushes thingamajig!

KOOLAID2 on June 4, 2012 at 11:52 AM

Surprise, surprise, surprise!

I don’t know anyone who is happy about bad economic news for the country. But the main obstacle to recovery is the Obama administration.

If there is any high-fiving going on with bad economic news, it is in the hope we are one step closer to the recovery that will only come once we rid ourselves of the Stagnater-In-Chief.

novaculus on June 4, 2012 at 11:52 AM

novaculus on June 4, 2012 at 11:52 AM

Agree and anyone who thinks Barry will be able to turn this around in his second term is just delusional.

The guy’s admitted he can’t work with anything other than a rubber-stamp Democrat Congress. There’s no way he’s getting that this year, even if he ekes out a win in November.

In 2014, he’s a lame duck.

Obama’s done, one way or another, whether it be because he’s ineffective or he loses. Anyone hoping for economic progress will vote Romney.

NoDonkey on June 4, 2012 at 12:01 PM

On a brighter note, Democrat fundraisers report a booming business in the marketing/sale of crap sandwiches.

NoDonkey on June 4, 2012 at 11:37 AM

Like this one?

Del Dolemonte on June 4, 2012 at 12:03 PM

If there is any high-fiving going on with bad economic news, it is in the hope we are one step closer to the recovery that will only come once we rid ourselves of the Stagnater-In-Chief.

novaculus on June 4, 2012 at 11:52 AM

I have every confidence that 10-15 years from now the LSM will do these “best/worst U.S. Presidents” things and Obama will consistently place in the top five, often being #1 ahead of Kennedy or whomever.

Also, I can imagine the Nobel Prize committee seriously mulling over the possibility of awarding Barry the Prize in Economics for next year.

Dr. ZhivBlago on June 4, 2012 at 12:08 PM

But the MFM keeps saying that car sales are up.

Red Creek on June 4, 2012 at 12:09 PM

~ Nice job, Barry ~

petefrt on June 4, 2012 at 12:14 PM

Dr. ZhivBlago on June 4, 2012 at 12:08 PM

MSM Top 5 US Presidents (2030)

1. Obama
2. Clinton
3. FDR
4. JFK
5. LBJ

Lock it in.

mankai on June 4, 2012 at 12:16 PM

Look me be clear, we inherited the worst recession since that asteroid wiped out the Dinosaurs.

And again and just like last time, this is Bush’s fault.

‘kay?

/Bark

CorporatePiggy on June 4, 2012 at 12:18 PM

And in more breaking news: Water is Wet!

Flora Duh on June 4, 2012 at 11:22 AM

That depends on what the meaning of wet is.

/Obama administration

chemman on June 4, 2012 at 12:29 PM

Another accomplishment for him with no help from GOP.
 
lester on May 19, 2012 at 10:52 AM

rogerb on June 4, 2012 at 12:46 PM

Was talking to the manager in an outdoor furniture/grill and patio store yesterday. He said business is bad, and it should be their peak season. Plenty of people sitting on their wallets.

lynncgb on June 4, 2012 at 12:58 PM

plouffe and axelturf were handed a layup in 2008. and thought they were michael jordan. and the compliant MSM forwarded the myth of their “prowess” and competency. it was a myth all along. they are the same idiots they were in 08. they just arent being handed the win this time.

t8stlikchkn on June 4, 2012 at 11:43 AM

They seem to be shooting themselves in the foot repeatedly, this time. I don’t remember this level of complete incompetence in 2008, but Obama’s awareness of the optics of his behavior is Zero.

dogsoldier on June 4, 2012 at 1:01 PM

David Axelrod, a top adviser to President Obama, said on Sunday that GOP lawmakers should stop cheering bad news and work with the White House to pass its job proposals.

Shouldn’t Axelturf be talking to Harry Reid?

GarandFan on June 4, 2012 at 5:23 PM

I told my husband we aren’t making any large purchases till after the election as I don’t want to add anything to the GDP. I would rather have the economy have a short term hit than have Obama be reelected.

Angineer on June 4, 2012 at 10:17 PM

My husband and I have both been laid off. My husband has an offer for a month’s worth of consulting in October, but that’s a long time from now. We buy nothing other than gasoline and groceries, and we are surviving on handouts from relatives, which we wish we didn’t have to take. We desperately hope Romney wins the election so maybe we can have some hope of getting employed again.

sherrimae on June 4, 2012 at 11:22 PM