As Wreckovery Summer comes crashing to an end, perhaps it’s fitting that among the last of the indicators for the Census Bureau to report is durable goods. After all, it looks like the economic slide we have seen since Joe Biden started selling the “Recovery Summer” PR plan looks very durable indeed. New orders for durable goods dropped overall, and especially when defense spending comes out of the picture:
New orders for manufactured durable goods in August decreased $2.5 billion or 1.3 percent to $191.1 billion, the U.S. Census Bureau announced today. Down three of the last four months, this decrease followed a 0.7 percent July increase. Excluding transportation, new orders increased 2.0 percent. Excluding defense, new orders decreased 1.2 percent. Transportation equipment, also down three of the last four months, had the largest decrease, $5.3 billion or 10.3 percent to $46.6 billion. This was due to nondefense aircraft and parts, which decreased $3.6 billion.
Shipments of manufactured durable goods in August, down following two consecutive monthly increases, decreased $3.1 billion or 1.5 percent to $197.9 billion. This followed a 2.5 percent July increase. Transportation equipment, also down following two consecutive monthly increases, decreased $3.1 billion or 5.9 percent to $49.5 billion.
On top of this, inventories have continued to rise, now for eight straight months. That will put pressure on wholesalers and retailers to keep orders down while they try to discount existing inventories to get product moving again. That may be good news for consumers with money to spend, but it’s bad news for people looking for work.
Reuters, of course, wasn’t expecting it:
New orders for long-lasting U.S. manufactured goods fell more than expected in August to post their largest decline in a year as bookings for aircraft and motor vehicles tumbled, but business spending rebounded strongly, a government report showed on Friday.
The Commerce Department said durable goods orders dropped 1.3 percent after a revised 0.7 percent increase in July. Markets had expected orders to fall 1.0 percent from a previously reported 0.4 percent gain.
Business spending “rebounded strongly”? In certain areas, yes, but overall capital goods orders and shipments both dropped, -0.9% and -0.8% respectively. Computers were a bright spot on orders, going up 12% and shipments up 4%.
And while excluding transportation gives a pretty good overall 2.0% boost — which Reuters takes pains to highlight in its report — the better measure is the exclusion of defense spending. Defense spending comes exclusively from the government, while the rest of the orders come mainly from the private sector. Excluding defense spending, new orders fell 1.2% and shipments fell 1.5%.
Nor was that the only bad news today. After a record drop in new-home sales in July, the market remained unchanged in August:
Sales of new single-family houses in August 2010 were at a seasonally adjusted annual rate of 288,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is unchanged (±16.7%)* from the revised July rate of 288,000 and is 28.9 percent (±11.0%) below the August 2009 estimate of 405,000.
The median sales price of new houses sold in August 2010 was $204,700; the average sales price was $248,800. The seasonally adjusted estimate of new houses for sale at the end of August was 206,000. This represents a supply of 8.6 months at the current sales rate.
In other words, August was yet another lost month in a lost summer.