Businesses are waiting for sales, consumers are waiting for higher wages and the economy is waiting for someone to make the first move.
Durable goods orders in March were much weaker than forecast and February's numbers were revised lower from their already negative base, bringing the anemic economic growth of the past six months down to the opening of the second quarter.
New orders for goods designed to last at least three years rose 0.8 percent, less than half the 1.9 percent prediction, following February's 3.1 percent decline, originally listed at -3.0 percent, reported the U.S. Census Bureau on Tuesday. Annual orders fell back into the red at -0.9 percent after a 5.0 percent surge in February and a 0.3 percent gain in January.
Goods orders outside the transportation sector fell 0.2 per, missing the 0.5 percent forecast by a wide margin. It was the second decline coming after February's unrevised 1.3 percent drop. Orders rose 1.4 percent in January. On the year orders were 1.39 percent lower in March, the 14th straight drop.
Boeing Company of Chicago reported 69 new aircraft orders in March, up from 2 in February though government statistics recorded a 5.7 percent decline in commercial airplane orders for the month. It is not unusual for the two sources to be at odds.
Businesses have been coping with a more than year-long decline in orders as a strong dollar and eroding global growth have cut into foreign sales. Domestic consumption has not picked up the slack. The sharp drop in oil exploration has curtailed business investment in the energy industry and consumer spending remains hobbled by stagnant wages.
Average hourly income has grown an average of 2.1 percent annually since the end of the recession in July 2009. Inflation for the same period has measured 1.5 percent. The average consumer has scant additional resources to increase spending.
Retail sales fell 0.3 percent in March, missing their 0.3 percent median forecast and were flat in February and down 0.4 percent in January. The 'retail sales control group', the match for the consumption component of GDP rose but 0.1 percent, below its 0.4 percent forecast.
Sales of non-defense capital goods excluding aircraft also called core capital goods, an oft used substitute for business investment, were flat in March. They had been projected to rise 0.6 percent. The February result was revised down to -2.7 percent from -2.5 percent. Sales rose 3.3 percent in January.
These core orders were 2.4 percent lower on the year and have declined for 14 straight months. Core sales have never fallen with this persistent regularity in the 48 year history of this series without the U.S been in recession.
Shipments of core capital goods rose 0.3 percent in March, one third of the 0.9 percent forecast and February’s reading was adjusted 0.1 percent lower to -1.8 percent. Shipments have declined in two of the three months of the first quarter. They slipped 1.4 percent in January.
The weak rebound in last month’s shipments after two negative months and the potential for further revisions, indicates that the manufacturing economy has not yet begun to recover from its doldrums of the last eighteen months and will start the second quarter at a disadvantage.
Overall durable goods orders were propelled into positive territory by a 48.4 percent surge in military capital goods orders, the most since April 2014, primarily for aircraft. Orders for computers, electrical appliances and fabricated metals sank.
Inventories were static in March after a 0.3 percent drop in February. Businesses are reluctant to add to inventory without a noticeable increase in sales.
The weakness in factory orders for long term goods is reflected in manufacturing payrolls which shed 29,000 workers in March after eliminating 18,000 jobs in February. These are the largest consecutive declines since January 2010.
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