The stock market media is trying to sell a positive spin on this morning’s confirmation that US factory orders increased .2% in February after falling for 6 consecutive months. The larger story however, is that January factory orders, that had previously been reported as falling -.2%, were revised lower to -.7% and on an annual basis US factory orders have now contracted -2.3% –to a level that suggests the US economy is already in recession.
Here is the latest big picture chart courtesy of the St Louis Fed. The previous recessions in 2001 and 2008 are marked with grey bands. This time different because the Fed will aggressively cut rates now to revive demand? Wait, they already did all that…
The reasons for the weakness are broad based and persistent:
“Manufacturing has been hit by a strong dollar and lower crude oil prices, which are putting a squeeze on the profits of multinational corporations and oil firms.
Some energy firms are either delaying or cutting back on capital expenditure projects.
Softer growth in China and Europe has also weighed on factories, with a report on Wednesday showing manufacturing activity at a near two-year low in March.
A labor dispute at the West Coast ports, which has since been resolved, is still causing disruptions to the supply chain.
Despite February’s surprise gain in factory orders, it may be sometime before the sector, which accounts for 12 percent of the economy, rebounds. Unfilled orders at factories fell 0.5 percent in February, declining for a third straight month.”
See Reuters: US Factory orders rise