US core capital goods orders tumble

CNBC ^ | 5/24/2019 | CNBC

[Poison Pill]

• New orders for U.S.-made capital goods fell more than expected in April, further evidence that manufacturing and the broader economy were slowing after a growth spurt in the first quarter.
• The slowdown was driven by exports and a buildup of inventories.
• Orders for non-defense capital goods excluding aircraft dropped 0.9% last month as demand weakened almost across the board, the Commerce Department said.
• Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, tumbled 2.1% in April.

....

The renewed trade tensions are expected to weigh on exports, which earlier this year had benefited from increased Chinese purchases of American goods. Industrial production dropped in April and a measure of factory activity declined to a near 10-year low in May.

[Poison Pill]

Tariffs kicking in...

[Fhios]

Come back later and tell me what it is during 4 quarter ... when it’s traditionally the period for capital investments expenditures.

[Poison Pill]

Come back later and tell me what it is during 4 quarter

Ok. When it's lower YOY in Q4, I wonder what your excuse will be?

[Sequoyah101]

Meanwhile, the markets will tumble.

Before someone chimes in and says the market and the economy are not linked or something like that. Don’t bother.

[nathanbedford]

Three quick observations:

1. The range of volatility over the last few years as shown by the chart places the current situation squarely in the middle, suggesting that the current decline is not quite so bad as indicated by NBC and Reuters.

2. The annual rate seems to be in relatively good shape.

3. It is not clear how much of this is due to trade tariffs nor is it clear how much that does come from trade tariffs comes from Chinese directed tariffs. In other words, there are tariffs now being presumably ended with Mexico and Canada which might be affecting these numbers but will soon be cured.

Also, it is unlikely that the United States shipping many washing machines to China therefore one question is whether the bulk of this downturn is due to,

4. The Boeing 737 fiasco which might be very substantial but the absolute numbers are not available in this article. Further, even if the Boeing 737 is not significantly contributing, other airplane sales to China might well be.

Normally I dislike criticism of unfavorable news by exhortations to ignore it because of the source, but in this case we have to ask whether these sources are so adverse to Trump that the data is somehow shaped?

We'll have plenty of other analyses appearing soon.

[Delta 21]

There isnt even anything manufactured today that is designed to last 3 years or more.

What a pantload!!

[hotsteppa]

Exactly. A blip from otherwise solid growth so far. Its the media's hope that there will be a slow down but so far it ain't happening.

[nathanbedford]

Maybe one more than three.

[Poison Pill]

in this case we have to ask whether these sources are so adverse to Trump that the data is somehow shaped?

CNBC is reporting, but the data comes from US Department of Commerce. If Wilbur Ross were cooking the books, he would do so in his favor.

With aircraft stripped out, the drop is .9%.

[BBB333]

Hey, Gumby -

Ever buy a Festool product?

A Makita 18v cordless tool?

Both companies warranties are for three years in a commercial/industrial use setting.

Plenty of things last for more than three years...

Does you brain hurt now?

[mason-dixon]

The slow-down in capital goods (items lasting many years) may be a consequence of demography — less people setting up new households, etc. to need these goods.

I see three current trends per demographics:
1) Baby Boom population bulge is now retiring — they have enough capital goods and are downsizing their living spaces.
2) College Loan and other economic factors are causing Millenials to defer home-buying and household formation and resultant purchase of capital goods
3) Surge of immigrants (those via legal (lottery, family reunification) are underclass or dependent (on family or welfare) therefore not usually forming households. And illegal immigrants are “in the shadows” - not forming households. Also immigrants are remitting $$ back to home country rather than saving for longer-term purchases.

Additionally, there’s the technological trend — capital equipment (ie appliences, cars) which most households purchase are lasting longer — so they are replaced less.

Are there some other trends to consider?

[aimhigh]

fell more than expected in April,

Perhaps it's time to fire the forecaster.

[billyboy15]

“Tariffs kicking in”

No evidence of that as yet.

Exports are the major reason for the drop and this fits with the known fact that Europe and the rest of the world has been slowing. They slow, they buy less from us and our exports drop.

Also, a strong economy like ours will mean high import levelsas is befitting our consumer spending driven economy.

[BfloGuy]

We’re drawing sweeping conclusions from one month’s data?

[ridesthemiles]

Since April is tax month, one would think these geniuses could factor that into such ‘reports’.

I only went to a ONE ROOM school, and I can think about it.

[Poison Pill]

Since April is tax month, one would think these geniuses could factor that into such ‘reports’.

80% of income tax filers receive a tax refund. That would mean more available cash in April, not less.

[kaktuskid]

More like bad weather, flooding, etc

[Buckeye McFrog]

Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, tumbled 2.1% in April.

That has to be due to bad press surrounding Boeing.

Do we even make toasters anymore?