Tags: Factory | Orders | Economists | Wrong

Factory Orders Data Show US Economists Are Always Wrong

By    |   Monday, 04 June 2012 10:31 AM

Monday’s report from the Census Bureau showed that new orders for manufactured goods in April fell by 0.6 percent. Orders in March fell by 2.1 percent, a significant downward change from the 1.5 percent drop reported a month ago.

Negative revisions in monthly updates are becoming common in economic data so the downward revision in March orders wasn't surprising.

The April factory-orders number disappointed most of the economists surveyed by Bloomberg prior to the release. They had been expecting a drop of 0.2 percent.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

The Census Bureau itself had told economists less than two weeks ago to expect a decline of 0.2 percent. They released an estimate for factory orders on May 24 and reported a 0.2 percent drop.

The report contained no explanation of why the bureau was forced to make a significant change about 10 days later.

It seems safe to assume that factory orders for April will fall further when the Census Bureau offers its next update in early July.

Unfilled orders are also included in the report. This is a measure of the backlog that manufacturers have. It declined in April for the first time in more than two years.

After 27 consecutive monthly increases in unfilled orders, the decline in this measure could be confirming an economic slowdown.

Overall, the report signaled weak economic growth and again cast a spotlight on the reality that government economists are overly optimistic in their initial guess on data.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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Monday, 04 June 2012 10:31 AM
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