Factory Orders Gave Back Earlier Gains
Factory Orders Gave Back Earlier Gains
New orders at U.S. factories were off 0.9 percent in March as February’s initial gains were revised down. The net result for the two-month period is a decrease of 0.2 percent. We still expect double digit declines in equipment & software spending through 2009, with auto shutdowns weighing most heavily on manufacturing in coming months.
There Will be Some Bumps on the Road to Recovery
Non-defense capital goods orders ex-aircraft, a key measure of business demand, added 0.4 percent to February’s gain - the first back-to-back increase since last summer. While any sign of strength is welcome, it is too early for a lasting turnaround.
Auto-makers will be under even greater pressure as restructuring and extended summer shutdowns weigh on factory data.
Falling Inventories and Survey Data Offer Hope
Inventories have been steadily coming down - falling in each of the last three months. While this weighed heavily on first quarter GDP, it could set the stage for a lasting recovery in manufacturing. As stockpiles are depleted, businesses have to go back to work and production can resume.
In a separate release, the ISM manufacturing survey showed its third straight increase in new orders, another positive.
Wachovia Corporation
http://www.wachovia.com
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