The report on factory orders is out, although we would caution that this is June data and we have already seen so many manufacturing reports from various regional reports that already show July data. The report showed a surprise drop of -0.5%, while the consensus report for the headline was actually +0.5%, if you look at the Dow Jones consensus estimate from its group of surveyed economists.
The report was weak, but it is weaker than the headline data would suggest. If you exclude transportation, the report would have been -1.8%. If you take out defense sector orders, the report would have shown a drop of -1.5%.
The only thing making this decline not look quite as bad, besides the delay from back in June, is that the May report was revised to +0.5% from an initial +0.7%. So the drop was not quite as severe as it looked.
Generally speaking, numbers of this sort do matter overall but the reality is that there is just much more data that is more fresh. We have already heard many manufacturing earnings reports and regional economic reports that could have led you to expect weakness. Still, -0.5% rather than +0.5% brings on just that much more of a chance that the recession in Europe and the rapidly slowing BRIC and emerging market growth is not just catching up to the United States … it is already deeply working its way through the system.
JON C. OGG
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