Factory Orders Decline, Suggests Weakness for Q4 Business Spending
Factory Orders Decline, Suggests Weakness for Q4 Business Spending
U.S. factory orders declined by $11.2 B in September after a sharp drop in August. These declines indicate future weakness in business equipment spending. Shipments, a coincident indicator of growth, fell for the second straight month as well. Inventories actually rose relative to shipments, suggesting production cuts ahead.
Non-Defense Capital Goods Ex-Aircraft: Weakness
New orders of non-defense capital goods ex-aircraft fell 1.5 percent in September after a previous decline in August. These declines are a negative for Q4 business spending.Shipments for non-defense capital goods ex-aircraft have been flat over the last three months. This coincident indicator suggests weak capex in the third and fourth quarters.
Computers and Inventories: Bad Company
Computer shipments have clearly downshifted in recent months. This is consistent with the fundamentals of weaker expected sales, lower profits and less credit.Meanwhile, the inventory/shipments ratio has risen, thereby suggesting a buildup of unintended inventories. This would suggest further cutbacks in production and employment ahead.
Wachovia Corporation
http://www.wachovia.com
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