Severe Weakness in the Latest Manufactured Goods Report

The full manufactured goods report, released today, was another disaster. The report included a major negative revision to manufactured goods last month.

New Orders

• New orders for manufactured durable goods in May, up four consecutive months, increased $0.2 billion or 0.1 percent to $282.9 billion, unchanged from the previously published increase. This followed a 0.2 percent April increase.
• Transportation equipment, up three of the last four months, drove the increase.
• New orders for manufactured nondurable goods decreased $3.2 billion or 1.0 percent to $300.2 billion.

Shipments

• Shipments of manufactured durable goods in May, down following three consecutive monthly increases, decreased $1.1 billion or 0.4 percent to $284.6 billion, down from the previously published 0.3 percent decrease in the Advance Data.
• Transportation equipment, also down following three consecutive monthly increases, led the decrease, $0.8 billion or 0.9 percent to $91.9 billion.
• Shipments of manufactured nondurable goods, down following three consecutive monthly increases, decreased $3.2 billion or 1.0 percent to $300.2 billion. This followed a 0.5 percent April increase.

Inventories

• Inventories of manufactured durable goods in May, up five of the last six months, increased $1.4 billion or 0.3 percent to $529.9 billion, unchanged from the previously published increase. This followed a 0.1 percent April increase.
• Transportation equipment, up eleven of the last twelve months, led the increase, $1.1 billion or 0.7 percent to $172.3 billion.
• Inventories of manufactured nondurable goods, up four consecutive months, increased $0.4 billion or 0.1 percent to $330.2 billion. This followed a 0.1 percent April increase. Petroleum and coal products, up three of the last four months, led the increase, $0.4 billion or 0.8 percent to $48.0 billion.

Advance Report

On June 27, I reported Durable Goods New Orders Rise Slightly From Big Negative Revision

The Commerce Dept revised durable goods orders for April from 0.7% to 0.2%. This is the 2nd month with huge negative revisions.

Full Report Comments

• The Full Report on Manufactured Goods includes nondurable goods and total manufactured goods not available in the advance report.
• Some of this weakness was expected from the advance report, but there were two significant negative revisions.
• The Commerce Dept revised total manufactured from 0.7 to 0.4 and shipments from -0.3 to -0.4. The Durable Goods revision last month from 0.7 to 0.2 was understood in the advance report.

Revisions, Revisions, Revisions

Note the ongoing revisions, all of them negative and significantly so.

It was the negative revisions and the ISM services report, that led me to conclude the GDPNow forecast would drop.

The edit was changing “a another” to “another”.

Services ISM Plunges

Earlier today, I noted The Services ISM Plunges Into a Recession Forecasting Contraction

The ISM Services report was a disaster. Based on the current report, the overall economy dipped into contraction.

There was one positive wildcard that kept the GDPNow forecast from plunging more than it did.

I will comment on the GDPNow report next.