May Durable Goods: More ‘Positive’ Seasonal Cooking

As has been the case in several other areas, the government’s seasonal conversions of orders and shipments in today’s durable goods report are suspect — all too predictably, in the direction of making things look better than they really are.

Orders (revised April 2015 and preliminary May 2015 are from today’s Census Bureau release):

Actual durable goods orders fell by 2.7 percent (rounded) from April 2015 to May 2015; the analogous change in 2014 was virtually zip. But after seasonal adjusted the difference between the two years narrowed to just 0.8 points.

Horse manure.

Today’s seasonally adjusted decline could easily have been 4 percent or more.

Actual durable goods orders cratered in May instead of advancing sharply as was the case in most previous years.

Now let’s look at shipments (revised April 2015 and preliminary May 2015 are from today’s Census Bureau release):

In the past four years, May shipments have significantly outpaced April by an average of 3.3 percent, leading to average seasonally adjusted increases of 0.88 percent. But this year, May shipments came in 0.46 lower than April (i.e., 3.76 points worse than the average of the past four years), but the seasonally adjusted result was only 0.98 points worse than the previous four-years seasonally adjusted average.

Again, horse manure.

Today’s seasonally adjusted decline could easily have been 2 percent or more.

Maybe the government can defend its seasonal conversions based on their magic formulas.

But no one can pretend that May’s seasonally adjusted results haven’t made the situation look far, far better than it really is.