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Initial Claims In Line With Consensus, Durable Goods Plunge

Tyler Durden's picture




 

Not much surprise in initial claims, which came at 382K on expectations of 383K, following the traditional upward revision in the previous number from 385K to 387K. Continuing claims came at 3,721K, higher than expectations of 3,700K, and another previous revision from 3,706K to 3,723K. But the biggest shocker was in Durable Goods, which plunged from a revised 3.6% in January to -0.9% in February, on expectations of 1.2%, as a result of a plunge in machinery shipments and new orders. Durables ex transportation dropped -0.6% on a 2.0% increase expectation. Lastly Nondefense Capital Goods orders ex aircraft was down -1.3% on expectations of  4.3% increase. The stagflation is ramping up.

From the release: "New orders for manufactured durable goods in February decreased $1.9 billion or 0.9 percent to $200.0 billion, the U.S. Census Bureau announced today. This decrease, down four of the last five months, followed a 3.6 percent January increase. Excluding transportation, new orders decreased 0.6 percent. Excluding defense, new orders increased 0.4 percent. Machinery, down two consecutive months, had the largest decrease, $1.2 billion or 4.2 percent to $26.6 billion." And the traditional economic activity filler, inventories, was up for the 15th consecutive month: "Inventories of manufactured durable goods in February, up fourteen consecutive months, increased $2.9 billion or 0.9 percent to $328.3 billion. This followed a 0.9 percent January increase."

Crude not liking the slow down in the economy:

 

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Thu, 03/24/2011 - 08:43 | 1094559 Racer
Racer's picture

UK retail sales figs not hot either..

Thu, 03/24/2011 - 08:50 | 1094590 Harlequin001
Harlequin001's picture

sounds bullish...

Thu, 03/24/2011 - 08:41 | 1094560 John Law Lives
John Law Lives's picture

Must be that darn snow.  It can't be a real reflection of the US economy...

Thu, 03/24/2011 - 08:49 | 1094588 Careless Whisper
Careless Whisper's picture

that's because we need more laws to create profit. like in florida. the governor wants ALL government employess to be drug tested quarterly. his wife owns a company that does the drug testing (solantic). brilliant.

http://saintpetersblog.com/2011/03/24/rick-scott%E2%80%99s-new-gift-to-s...

 

 

 

Thu, 03/24/2011 - 08:51 | 1094596 LawsofPhysics
LawsofPhysics's picture

More "make-work" bullshit by the elite to enrich themselves, brilliant.

Thu, 03/24/2011 - 09:09 | 1094677 snowball777
snowball777's picture

Sounds like Rick "Healthcare Monopolist" Scott deserves a protest; I suggest everyone get together and take a leak, if not dump, on the Florida capitol building.

 

Thu, 03/24/2011 - 09:59 | 1094887 pazmaker
pazmaker's picture

Careless whisper your name is befitting...  You should read the articles you are going to post.   The Governer does not want to test ALL state employees quarterly.  He wants to do random drug test quarterly.  Which will have the potential for any state employee to be tested at least quarterly.  Now before you junk me I am not saying I agree with this new proposed policy, but that there is a stark difference between testing ALL state employees quarterly and having randoms quarterly, which many corporations do as well.

Thu, 03/24/2011 - 08:41 | 1094561 Commander Cody
Commander Cody's picture

OK, because I remain confused about signals in the economy, is this bullish or not?

Thu, 03/24/2011 - 08:43 | 1094570 reading
reading's picture

Everything bullish.

Thu, 03/24/2011 - 08:45 | 1094580 Ray1968
Ray1968's picture

Let's all repeat: Its all about the POMO.

 

Nothing else matters. Should QE stop, so will the bull market. The answers are amazingly simple.

Thu, 03/24/2011 - 09:15 | 1094715 Long-John-Silver
Long-John-Silver's picture

+1

Thu, 03/24/2011 - 08:51 | 1094599 Harlequin001
Harlequin001's picture

Incredibly bullish...

buy more gold...

Thu, 03/24/2011 - 08:53 | 1094613 TexDenim
TexDenim's picture

Not bullish, because it increases the likelihood of the Fed stopping its spending binge. Less free money = lower equity prices.

Thu, 03/24/2011 - 09:06 | 1094664 Harlequin001
Harlequin001's picture

TexDenim, nothings 'not bullish' anymore, not even a scale 9 earthquake, a 30 foot tsunami and a full on nuclear meltdown...

Of course, bullish depends on what you buy...

There is zero possibility of the Fed ending its spending binge and even if they did, no body else would...

Stand by for skyrockets...

Buy gold.

Thu, 03/24/2011 - 08:57 | 1094642 smithcreek
smithcreek's picture

Did the world suddenly stop spinning and fling us all in to outerspace?  No?  Then BULLISH!  Of course, it it did, there would be an increase in GDP when we need to rebuild, so BULLISH!

Thu, 03/24/2011 - 09:16 | 1094723 willien1derland
willien1derland's picture

CC - It shows the area of the economy which contributed the most to GDP growth is slowing down - technically, under 'normal' economic condition this would be a bearish sign as it shows the mfg sector of the U.S. economy contracting (new orders is a key element of review), however, in light of the current environment this is a data point that the Federal Reserve can use to promote another iteration of Quantitative Easing (Fiat creation, money printing) - Hope that helps

Note on Durable Goods - New orders for durable manufactured goods fell 0.9% in February, going against expectations for a modest increase. Excluding transportation, new orders declined 0.6%. Shipments rose 0.3%, and inventories were up 0.9%. The details of the report were mixed; core capital orders fell 1.3%, while shipments rose 0.8%.

Thu, 03/24/2011 - 08:44 | 1094566 cossack55
cossack55's picture

I insist on buying everything second hand. Cheaper and shuts up LIESman.

Thu, 03/24/2011 - 08:43 | 1094571 The Axe
The Axe's picture

fucking snow    buy cat,ir,de  etc....etc...

Thu, 03/24/2011 - 08:56 | 1094609 Harlequin001
Harlequin001's picture

Yep, nothin' to do with the implosion of credit...

Damned snow...

Thu, 03/24/2011 - 08:43 | 1094574 AccreditedEYE
AccreditedEYE's picture

Here comes the "this is a reason to keep Fed policy accommodative" BS. When ag and fuel goes up another 50-100%, we'll see how well that line works out for them.

Thu, 03/24/2011 - 08:45 | 1094579 NumberNone
NumberNone's picture

Bullish.  Jobless claims down.  There is some other aspect to this report but I'm not allowed to focus on it.  Market up 150 on great jobless claim news.

Thu, 03/24/2011 - 08:45 | 1094581 John Law Lives
John Law Lives's picture

Lowest monthly total for new home sales on record (February data) = check

Sharply contracting durable goods orders = check

Oil (WTI) over $106 = check

Positive futures = check

Everything is normal here.  Nothing matters other than more currency being printed.

Thu, 03/24/2011 - 08:45 | 1094582 billwilson
billwilson's picture

Don't worry, there will be a jump next month with all the orders for replacement Tomahawk missles.

Thu, 03/24/2011 - 08:54 | 1094614 Harlequin001
Harlequin001's picture

Yes, and keep an eye out for increased exports of lead wellies...

Thu, 03/24/2011 - 09:19 | 1094736 Long-John-Silver
Long-John-Silver's picture

RTN Bitch. Single supplier no bid contractor for Tomahawks 

http://www.google.com/finance?client=ob&q=NYSE:RTN

Thu, 03/24/2011 - 09:28 | 1094766 Harlequin001
Harlequin001's picture

and here's the results of the search I did for shit proof pants...

http://search.yahoo.com/search;_ylt=A0S0uLeERotNvLUAIJebvZx4?vc=&fp_ip=m...

 

Thu, 03/24/2011 - 08:46 | 1094584 mmlevine
mmlevine's picture

You can count me as a +1 to initial unemployment claims - lost my job last week.  Not a small job either.  CFO of a business that's been around 40 years.  Tried the best we could to keep it afloat but in the end, margin pressure was too much.  Doors are closed.  Another one bites the dust.

Thu, 03/24/2011 - 08:51 | 1094601 duo
duo's picture

sad to hear.  what kind of business?

Thu, 03/24/2011 - 09:01 | 1094656 mmlevine
mmlevine's picture

Sold OEM products sourced from Asia into the US retail distribution channel.  Most of the stuff ended up with the big box retailer.  Example:  Pencil sharpener sourced for a brand name that sold to Office Depot.

I have to say I'm not surprised - it was coming for a while.  We've been getting killed by the Chinese on price for over a year and we couldn't pass the increase along to our customers - they simply refuse the price increase.  Terrible business model and I'm sure we will see a lot more "margin compression" in the very near future.  We hung in for as long as we could until our fixed costs exceeded gross profits - poof!

It is sad and there will be more companies like ours to go.  The USA gave away the manufacturing base to Asia.  We can't even make an electric pencil sharpener in the US so now we are at their mercy.

I'll bounce back. 

 

Thu, 03/24/2011 - 09:25 | 1094746 John Law Lives
John Law Lives's picture

You said that you sold OEM products made in Asia.  Why would Chinese-made products be eroding the profit margin on your OEM goods?  Where in Asia were your OEM goods made? If the Chinese are now selling those same goods directly in the channels that you use, that would make sense that your margins are getting crushed.

I know companies with models akin to what you described.  They would take a product specification (e.g. consumer electronics) and shop around it in China until they found a supplier.  That supplier would manufacture the products and place the brand name of the US company on the product and the packaging.  The US company would import the goods and sell them out to retailers (e.g. RadioShack) and distributors (e.g. Graybar) etc.  The big risk to those US companies would be if the Chinese decided to manufacture and sell the exact same widgets under their own brand directly to those same retailers and distributors.  Is that what happened to you?

Thu, 03/24/2011 - 09:53 | 1094860 mmlevine
mmlevine's picture

The model you described is the exact business model we operated under.

The vast majority of products were from Chinese suppliers (factories).  What happened over the last few years was that these factories would increase the price of a product, and basically told us "take it or leave it".  They wouldn't budge on price where in the past we had some negotiating ability.  For the last year or so, no dice.  Don't like the price, don't buy from us.

Since we were esentially a middle man, we had no choice but to accept the price increase.  However, we we did not have the ability to pass the price increase to distribution channel.  They would not accept a price increase and for a product that we made 7% GPM, we now made 4% GPM.  There's the margin compression and why are margins got "crushed".

Many companies like ours have been holding back increasing prices USA customers - 4% GPM is better than no GPM.  And yes, China does complete directly with this business model through websites like Alibaba and Global Sources.  In effect, they do manufacture the same widget and have the ability to sell direct to the USA to the same retailers and distributors.  I did not find this as prevalent as the price increases.  Most USA retailers and distributors still want to deal with a USA office rather than go direct (time zone, language problems etc).

Anecdotally, I heard that the factory owners were too busy speculating in real estate and stocks to concentrate on their core business of making product.  I chuckled as we all know how that story ends up!

Thu, 03/24/2011 - 12:01 | 1095484 John Law Lives
John Law Lives's picture

mmlevine,

Thank you for your reply and for sharing your experience.  I hope you find another good job out there.

I wonder when the day will come that China will heavily market its own brands direct to US retailers and distributors without using middle men like you described.  It may take more "getting used to" by the US consumer, but I figure the day will come when we will see retail stores filled with more and more Chinese-made products labeled under their own brand names.

 

Thu, 03/24/2011 - 12:08 | 1095533 pazmaker
pazmaker's picture

mmlevine,  you said you closed the doors, just curious how many others lost jobs as well?

Thu, 03/24/2011 - 08:56 | 1094620 LawsofPhysics
LawsofPhysics's picture

"margin pressure was too much"

 

Understatement of the century.  I have been doing my best to keep all the staff I can.  I cut my own salary to keep some people on in hopes of securing some more customers that require their expertise.  I'll know whether or not it works in June, then we will be good for a while longer, or the ax will fall.

I said it before, and I will say it again.  The financial sector of our economy remains a cancer that the broader sectors of the economy (which actually make things of REAL value - not mark to fantasy "value") can no longer sustain.  We all know where this is headed.  Just hedge accordingly.  In your case, take your severance and buy PMs and oil.

Thu, 03/24/2011 - 09:02 | 1094649 Harlequin001
Harlequin001's picture

Now that is good advice.

the policies are not in place that could lead to a recovery...

and the economy is not in a condition from which it could easily recover...

mmlevine, you have my sympathies old stick.

Good luck with your new venture.

Thu, 03/24/2011 - 09:00 | 1094653 John Law Lives
John Law Lives's picture

Sorry to hear that.  Hope you got a decent severance package.

Thu, 03/24/2011 - 09:07 | 1094675 mmlevine
mmlevine's picture

You want to hear irony?  I had an employment agreement for 6 months severance in case of termination or bankruptcy.  So the company fails but now I have to fight for my severance because the company claims "no money to pay me".

The company still has some money around but I need to engage counsel to go after it.  Remember, never screw with the accountant - they always know where the money is!

Thu, 03/24/2011 - 09:24 | 1094749 John Law Lives
John Law Lives's picture

Good luck.  Yes, I know what you mean re. accountants...

Thu, 03/24/2011 - 09:25 | 1094761 willien1derland
willien1derland's picture

Very sorry to hear that mmlevine - that must be very difficult to endure as I am certain you worked very diligently doing all you could to keep operations afloat - four (4) months after the Sept 2008 financial crash the very large construction equipment mfg that I worked for had a handful of orders where we would normally have had thousands - it was a VERY difficult time & many people made incredible sacrifices to keep the ship moving - I can only imagine what you have been through - My sincere condolences & I will keep you in my prayers -  

Thu, 03/24/2011 - 09:58 | 1094879 mmlevine
mmlevine's picture

I appreciate yours and everyone else who sent good luck and well wishes.  We will be fine and I always have my Zero Hedge family - where I come for my daily dose of sanity in a very insane world.

And to the person who "junked" my original message - fuck you. I hope it was a mistake.

Thu, 03/24/2011 - 11:59 | 1095507 John Law Lives
John Law Lives's picture

Anyone who junked you on this thread is an a-hole.  I defended muni bonds on this site and got junked to death by the anarchists.  BTW, Texas General Obligation bonds are selling like hotcakes.  Many people consider them more secure that US Treasuries.

Yes, it is an insane world.  Very scary that people like The Ben Bernank perform the way they do without any apparent restraint.

Thu, 03/24/2011 - 10:16 | 1094955 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

mmlevine, that is tough. Good luck in finding a new occupation. I wonder who is the little bitch that junked you? Some of these junks on ZH lately are pointless. Whoever that little bitch is, here is your chance to junk me.

Thu, 03/24/2011 - 08:49 | 1094592 SheepDog-One
SheepDog-One's picture

Bullish, bearish, whats that matter? We're in a RECOVERY, dammit!

Thu, 03/24/2011 - 08:52 | 1094605 Misean
Misean's picture

We don't need no stinking orders! Gives us more time to front run the Feral on stock purchases. +200 point ramp!

Thu, 03/24/2011 - 08:52 | 1094608 Rockfish
Rockfish's picture

With average income in this country at 48k and after paying for housing, fuel, food, and phone and cable there is just isn't that much left to buy any more shit. Go figure.  Raw spinach,  11.48 per lb - Hot Pockets 1.29 - health care cost priceless

Thu, 03/24/2011 - 08:53 | 1094616 thepigman
thepigman's picture

okay, I'm starting to short this

scam again.

Thu, 03/24/2011 - 08:57 | 1094636 LawsofPhysics
LawsofPhysics's picture

Careful, take your cues from the primary dealers and the Fed.  I have been shorting most mornings at "safe" levels with a PM hedge, but if the manipulators want to, they can blow out all the shorts again very easily.

Thu, 03/24/2011 - 09:02 | 1094658 thepigman
thepigman's picture

Gotta get some toes in. The bernank

has done nothing but manipulate

prices. This is a joke.

Thu, 03/24/2011 - 09:04 | 1094663 the not so migh...
the not so mighty maximiza's picture

they might drop a money printing machine on your head.

Thu, 03/24/2011 - 09:16 | 1094719 thepigman
thepigman's picture

Naw, this sucker was rolling
over before the earthquake. The hedge
funds are backing away.

Thu, 03/24/2011 - 09:06 | 1094665 the not so migh...
the not so mighty maximiza's picture

ouch

Thu, 03/24/2011 - 09:39 | 1094796 SheepDog-One
SheepDog-One's picture

Something big is coming real soon, theyre in last gasp desperation mode. Silver signaling it, equities are irrelevant, just eye candy for the dummies.

Thu, 03/24/2011 - 08:55 | 1094618 RunningMan
RunningMan's picture

I went back to the data to get a sense of what the initial claims should look like. Seems like we are slightly higher ~20% relative to prior recovery periods. The continuing claims are much higher than they ought to be if the recovery has taken root. Durable goods not too surprising - time to hunker down.

Thu, 03/24/2011 - 08:59 | 1094647 youALREADYknow
youALREADYknow's picture

Continuing claims numbers are not comparable to past periods. Extended claims help find the true number and it blows past "recovery" periods away.

Thu, 03/24/2011 - 09:07 | 1094676 Racer
Racer's picture

That's because there was no recovery to take root, only Hopium smoke

Thu, 03/24/2011 - 09:26 | 1094759 snowball777
snowball777's picture

Factor in the permanently disgruntled...you'll get something more like 30% 'continuing'.

Thu, 03/24/2011 - 09:33 | 1094777 oogs66
oogs66's picture

I continue to believe that with so many people working part time or as consultants with no benefits, that the base rate of new claims will be lower than in the past.  Why lay someone off if you are paying benefits, etc.  I think today's 375k is last year's 425k.  And as a % of work force the data is worse as there are few people with the 'capability' to get laid off. 

Thu, 03/24/2011 - 08:58 | 1094635 dcb
dcb's picture

amaqzing how in an efficient market it keeps going up on bad news, WTF.

Thu, 03/24/2011 - 09:11 | 1094686 Harlequin001
Harlequin001's picture

Yes it's incredibly efficient isn't it.

Even a small amount of cash pumped in just before the close can produce tremendous medium term results...

and let's not forget the performance bonus's either.

I for one am incredibly bullish, since all one needs do is sell more debt...

Thu, 03/24/2011 - 08:59 | 1094639 overmedicatedun...
overmedicatedundersexed's picture

ben to timmy: we got to get people thinking inflation-inflation..they will then spend today spend I say..and then the economy will sky rocket in time for 2012 elections..whaada think timmy..pomo until PM's go to the moon and then the people will spend every FRN they got!!

Thu, 03/24/2011 - 09:15 | 1094713 snowball777
snowball777's picture

A brilliant thesis...if they had any FRNs, but they didn't, don't, can't get credit, and won't be spending anything that isn't provided by Uncle Sam and his printing buddies.

 

Thu, 03/24/2011 - 09:49 | 1094842 overmedicatedun...
overmedicatedundersexed's picture

snow, my alter ego on the political spectrum..it's not important that the people have FRN's ,,it's that Ben & Timmy think they do and that's what this policy of theirs will be based on..eventually it may be you are right and there are no FRN's left in the hands of the People to stimulate..but my bet is Ben thinks there is. 

Thu, 03/24/2011 - 09:18 | 1094724 Harlequin001
Harlequin001's picture

Its not that I worry about the economy going skyrockets, more mushroom-ish or even slightly pear shaped...

Thu, 03/24/2011 - 09:38 | 1094800 SheepDog-One
SheepDog-One's picture

Only FRN's most people have is whats sent to them monthly in an extended unemployment benefit.

Thu, 03/24/2011 - 09:08 | 1094674 Fortunes Favor
Fortunes Favor's picture

Bad news is good news for the commodity and equity markets.


Understanding the Government Manipulated Credit Market Evolution @ http://rosenthalcapital.com/blog/2011/03/understanding-the-government-manipulated-credit-market-evolution/

Thu, 03/24/2011 - 09:18 | 1094735 Coldsun
Coldsun's picture

Based on this news, I need to quickly invest everything in stocks and bonds (especially Portugese bonds).

Where's the "all-in" key on this keyboard? Seems like everyone else has one so I want one too... Must not be on the standard QWERTY keyboard, only the ultra-special-limited-edition "Destroyer of Nations" keyboards that the central banks have.

Thu, 03/24/2011 - 09:23 | 1094751 snowball777
snowball777's picture

It's the one marked 'FR' for full retard.

Thu, 03/24/2011 - 09:40 | 1094805 SheepDog-One
SheepDog-One's picture

Its the key right next to Bens 'cntrl/print' key on the Destroyer of Nations keyboard.

Thu, 03/24/2011 - 09:31 | 1094775 Johnny Lawrence
Johnny Lawrence's picture

And the market opens up...in other news, a new Reuters poll just came out 10 minutes ago...survey of 400 market analysts and economists.  And their forecasts for 18 different world stock indicies...UP UP UP UP!

Interactive graphic where you can see the average forecasts: http://r.reuters.com/juw68r

Average forecast for the S&P from now until the end of 2011: +7.9%

 

Thu, 03/24/2011 - 09:41 | 1094808 SheepDog-One
SheepDog-One's picture

S&P...you mean that German index? Why should I care about that?

Thu, 03/24/2011 - 09:45 | 1094823 augie
augie's picture

I would like some of what they are smoking please.

Thu, 03/24/2011 - 09:41 | 1094810 99er
99er's picture

SPX

Not too keen on EW but here's a bearish count.

http://www.zerohedge.com/forum/99er-charts-0

Thu, 03/24/2011 - 09:43 | 1094821 I am Jobe
I am Jobe's picture

Stock futures rising following gains overseas

http://finance.yahoo.com/news/Stock-futures-rising-apf-183037501.html?x=...

WTF is all i can say.

Thu, 03/24/2011 - 09:43 | 1094822 SheepDog-One
SheepDog-One's picture

BTW, dont go too overboard, the Chinese 'DOW' market is only up 60 lame points, to 12,080 where it was about 3 months ago. Silver up another full FRN this morning the real story lies deep beneath.

Thu, 03/24/2011 - 09:49 | 1094843 SheepDog-One
SheepDog-One's picture

The point of the article was oil was down, its climbing steadily now back well over green now with silver near all time highs as the Chinese DOW market barely up 30 points now.

Really people, get a grip stocks are still not up to where they were 4 months ago! Stop with the 'STOCKS KEEP CLIMBING' nonsense you cant be THIS easily fooled!

Inflation adjusted, stocks are WAY DOWN!

Thu, 03/24/2011 - 09:58 | 1094882 Spalding_Smailes
Spalding_Smailes's picture

Chicago manufacturing is booming. My buddy is getting inundated with quotes and he has one of the largest machine shops in Illinois. Another large shop has stopped quoting orders and my bud has a 8 to 10 week lead time ..... He has been doing better over the last 6 months but he said the quotes really picked up over the last two weeks.  He's also getting quotes from overseas and has someone coming in from Germany next week looking to outsource some work.

 

US Steel is a steal at this price ... It will be over $70 in 12 weeks.

Thu, 03/24/2011 - 10:39 | 1095061 SheepDog-One
SheepDog-One's picture

LOL, yea in your dreams.

Thu, 03/24/2011 - 20:39 | 1097666 Element
Element's picture

But the biggest shocker was in Durable Goods, which plunged from a revised 3.6% in January to -0.9% in February, on expectations of 1.2%, as a result of a plunge in machinery shipments and new orders.

 

Consumer Metrics Institute Growth Index (CMIGI):
http://consumermetricsinstitute.com/index.html

 

The US online durables sitution is as sick as ever as well. ... i.e. so is debt cards (credit cards) ... and probably personal Net use as well

 

When durables are this weak, and the UK growth is so phuked, and Japan projected for a transient >4% dip (if we are very lucky), and the EU hang by a thread ... Dubya-dip coming

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