ALL IS NOT WELL After Nine Months of Year-Over-Year Declines Factory Orders and Shipments

While the Institute for Supply Management’s surveys (manufacturing and non-manufacturing) tell us that all well, or at least positive, there’s this annoying problem: The hard data largely disagree.

Take factory orders and shipments, following yesterday’s July release from the Census Bureau. Lots of numbers here — I’ll just worry about explaining what’s highlighted and boxed.

First, shipments:

Points:

• 2015 shipments have trailed the same month in 2014 in every single month this year, and in total are running 3.8 percent behind last year (3.7 percent behind after seasonal adjustment) last year. Not shown: November and December 2014 seasonally adjusted shipments also trailed the same two months in December 2013. That’s nine months in a row of year-over-year monthly declines.
• 2015 shipments have trailed the same month in 2013 in four out of seven months so far this year, and 5 of 7 after seasonal adjustments (red boxes). Year-to-date, 2015 trails 2013 by 0.8 percent (o.7 percent after seasonal adjustments).
• 2015 shipments have trailed the same month in 2008, in two of seven months so far this year, and 1 of 7 after seasonal adjustments (green boxes). Year-to-date 2015 shipments are only 1.3 percent higher than 2008 (1.8 percent after seasonal adjustment).

Now. orders:

Points:

• 2015 orders have trailed the same month in 2014 in every single month this year, and in total are running a breathtaking 7.3 percent behind last year (7.2 percent behind after seasonal adjustment) last year. Not shown: November and December 2014 also trailed the same two months in December 2013 (both raw and after seasonal adjustments). That’s also nine months in a row of year-over-year monthly declines.
• 2015 orders have trailed the same month in 2013 in six out of seven months so far this year, and 5 of 7 after seasonal adjustments (red boxes). Year-to-date, 2015 trails 2013 by 2.4 percent (2.2 percent after seasonal adjustments).
• 2015 orderss have trailed the same month in 2008, in five of seven months so far this year, and 6 of 7 after seasonal adjustments (green boxes). Year-to-date 2015 orders are 1.1 percent lower than 2008 (0.5 percent after seasonal adjustment).
• July’s year-over-year orders declines are particularly steep. Much of that is due to July 2014 having an extraordinarily high level of aircraft orders. But even after factoring that out, the decline in everything else is about 6 percent.

The press has barely noticed any of this.

The output in the roughly one-third of the economy covered here is significantly smaller than it was a year ago. Yet we’re supposed to believe that there’s overall GDP growth. Excuse me for strongly doubting that — at least based on the real definition of GDP, as opposed to the consumption-based compilation that is the basis for the government’s GDP reports.