Category Archives: Japan

Rail traffic, Business confidence, UK imports, Trade news

Posted on by

Deep in contraction:


Looks to be below 2008 levels:

So looks like the current tariffs remain. As previously suggested, the US President is narrowly focused on the money he’s collecting, as the tariffs remove $US net financial assets from the global economy and discourages transactions with the US. That is, it all functions as a transactions tax on the global $US economy:

Trump says he agreed with Xi to hold off on new tariffs and to let Huawei buy US products

Trump and Xi held their highly anticipated bilateral meeting at the G-20 summit in Japan.
The two leaders agreed to hold off on new tariffs and to proceed with trade negotiations after a series of escalations to their nations’ tariff battle threatened to disrupt the global economy.

Share

Durable goods, Austria PMI, Trade, Trump comments

Posted on by

Now in contraction year over year:

US Durable Goods Orders Drop for 2nd Month

New orders for US manufactured durable goods fell 1.3% in May, after a 2.8% plunge in April and much worse than market expectations of a 0.1% drop. Transportation equipment, down three of the last four months, was mostly responsible for the decline. Meanwhile, the so-called core capital goods orders rose 0.4%, recovering from a 1% decline in April.

Highlights

Net exports are not improving which looks to be a negative for second-quarter GDP. The US deficit in cross-border goods trade came in at a much deeper-than-expected $74.6 billion masking, however, a strong 3.0 percent rise in exports to $140.2 billion. But imports outmatched the rise with a 3.7 percent increase to $214.7 billion.

Exports of foods, feeds & beverages are a major plus for May, up 6.1 percent to $11.9 billion though year-on-year contraction is still substantial at minus 9.1 percent. Capital goods exports are also strong, up 3.5 percent to $46.3 billion with this yearly contraction at 3.8 percent. Vehicle exports rose 4.7 percent to $13.8 billion and show a 1.5 percent yearly gain.

Imports of foods fell 0.5 percent in May to $12.8 billion with all other categories, however, showing sharp increases especially vehicles at a 7.5 percent monthly gain to $33.2 billion for a yearly increase of 10.9 percent. Consumer goods imports rose 2.7 percent to $55.5 billion in the month but are down 2.4 percent on the year.

Dementia setting in?

Trump says big tech companies like Twitter are ‘all Democrats’ and purposely repressing his reach

“Twitter is just terrible, what they do. They don’t let you get the word out,” Trump tells Fox Business Network. “I’ll tell you what, they should be sued,” Trump says.
Twitter and Facebook have doubled down on efforts to remove comments and accounts suspected of hate speech as well as those thought to be bots.
“These people are all Democrats,” Trump says. “If I announced tomorrow that I’m going to become a nice liberal Democrat, I would pick up five times more followers.”

$300 billion tariff threat looming over the G-20 meeting between Trump and Xi

President Trump’s threat to impose punishing new tariffs on $300 billion in Chinese goods looms over a meeting scheduled this week between him and Chinese President Xi Jinping at the G-20 summit of world leaders.
The two are scheduled to meet Saturday, the second day of the two-day summit in Osaka, Japan.
Both leaders stand to benefit from a deal that staves off new tariffs. But hardliners in Beijing and Washington are pressing for further isolation, fueled by concerns over the two global powers’ rivalry in economic and military matters.

Share

Retail sales, Industrial production, Interest payments, Japan profits, Euro area fiscal balance

Posted on by

Weak and weaker than expected:

Highlights

The second quarter gets off to a stumbling start pulled down by a 0.2 percent headline decline in an April retail sales report where the core details show unexpected weakness. Excluding autos, in which sales were already expected to fall sharply, April sales managed only a 0.1 percent gain to fall underneath Econoday’s consensus range. Excluding autos and also gasoline sales, which were already expected to rise sharply, sales fell 0.2 percent in April to also fall below the consensus range. Just making the consensus range is a no change result for the control group, a component used in the calculation of GDP and pointing squarely to early second-quarter deceleration in consumer spending which had already decelerated sharply in the first quarter.

A 1.1 percent decline in auto sales (signaled by the prior release of unit sales at manufacturers) is no surprise and neither is a 1.8 percent jump at gasoline stations, signaled here by the price of gas. The big surprise is a 1.3 percent drop at electronics & appliance stores that follows a 4.3 percent tumble in March. Weakness here hints at lower prices for consumer electronics and also lower spending on home improvements. Furniture sales also hint at trouble for residential investment, coming in unchanged following March’s 3.1 percent decline, as do sales of building materials which fell 1.9 percent in April following, however, a 1.2 percent rise in March.

The best news in the report comes from its weakest sub-component, department stores where April sales jumped 0.7 percent. This was enough, however, to give only a small 0.2 percent lift to the overall general merchandise component. Another positive is restaurants where sales rose 0.2 percent on top of a great monthly surge of 5.7 percent in March.

Another negative surprise:

Highlights

Like retail sales earlier this morning, the headline 0.5 percent decline for April industrial production is not masking strength underneath. Also falling 0.5 percent was production at manufacturers which is even more unexpected than the headline decline.

Motor vehicles and parts, where consumer sales have been mostly soft this year, fell 2.6 percent in April for a second monthly decline and year-over-year contraction of 4.4 percent. Business equipment fell 2.1 percent in the month for yearly growth of only 0.1 percent which doesn’t point to acceleration for business investment. Consumer goods also fell, down 1.2 percent in the month with construction supplies up only 0.1 percent that follows March’s 1.7 percent dip in readings that don’t point to strength for construction in general. Selected hi tech is a positive for April, up 0.6 percent with annual growth here at 3.2 percent.

Also positive is a 1.6 percent jump in mining volumes which rose 1.6 percent in April that follows, however, three straight months of declines. Output at utilities fell 3.5 percent in April with the yearly rate of minus 4.7 percent also pointing to general industrial weakness.

However tight the US labor market may be, capacity does not appear to be tight in the industrial sector as capacity utilization fell 6 tenths in April to a much lower-than-expected 77.9 percent. Utilization in the manufacturing sector is down 5 tenths to 75.7 percent.

This report doesn’t breakdown production of goods aimed for the domestic market and those for the foreign market but it will nevertheless offer a baseline for the overall effects of increased US-China tariffs. Going into those tariffs, the manufacturing sector, which first began to slow late last year, appeared to be flat at best.


Rolling over:

Corporate Japan logs first profit dip in 3 years as China slows

Fiscal has tightened in the euro area, and now with the global trade collapse prospects are looking grim:

Euro Area recorded a Government Budget deficit equal to 0.50 percent of the country’s Gross Domestic Product in 2018. Government Budget in the Euro Area averaged -2.84 percent of GDP from 1995 until 2018, reaching an all time high of -0.50 percent of GDP in 2000 and a record low of -7.40 percent of GDP in 1995.

Share

Employment, US PMI’s, Factory orders, Japan sales tax, HK, MMT comments

Posted on by

Headline number looks promising. The question is whether employment will lag the other indicators that are decelerating, or provide the support that turns them around. And note the .1 drop in the work week is equivalent to maybe to something over 100,000 jobs:

Highlights

That sound you hear is the economy revving up. Nonfarm payroll growth easily beat expectations at 263,000 in April as did the unemployment rate with an outsized 2 tenths decline to a 49-year low of 3.6 percent. Wages didn’t show any immediate jolt from the strength, coming in as expected for the monthly rate, at 0.2 percent, and 1 tenth under expectations for the year-on-year rate at 3.2 percent.

Tightening conditions are the signal from the pool of available workers which continues to be drained, down nearly 500,000 in the month to 10.9 million. The participation rate, reflecting the decline, fell 2 tenths to a lower-than-expected 62.8 percent.

Payrolls are headed by a second sharp gain for construction, up 33,000 in April after 20,000 in March, for a sector where scarcity of labor especially skilled labor has been an ongoing theme. Perhaps topping construction for April’s payroll highlight is a 76,000 surge in professional & business services that includes an 18,000 jump in temporary help. The strength here, which adds to prior gains, indicates that businesses, in an effort to get the people they need immediately, are turning to contractors to fill slots. Government payrolls are also very strong, up 27,000 in April.

The latest unemployment drop was for the wrong reason

The nation’s unemployment rate sank in April to the lowest rate since December 1969, but the milestone comes with a big caveat: The decline stemmed from more people quitting their search for work.

The jobless rate slipped to 3.6% last month from 3.8% in March, continuing a long downward arc from a 27-year high of 10% in 2009. Yet that doesn’t mean there aren’t some potential trouble spots.

Take the size of the labor force. It contracted in April by nearly half a million people and fell for the fourth straight month.

The last time the labor force fell four months in a row was during the waning stages of the 2007-2009 Great Recession. And before that one has to go back to 1950.

As a result, the so-called labor-force participation rate slipped to 62.8% from a six-year high of 63.2% in January. That is, every 63 of 100 able-bodied Americans 16 or older either have a job or are seeking one.

The shrinking labor force “is the primary factor behind the unexpected decline in the unemployment rate,” noted chief economist Richard Moody of Regions Financial.

This is from the household survey. The two surveys tend to converge over time, and the payroll survey is much larger and less subjective:

The household survey shows employment is down for the year:


Up nicely for the month, but year over year growth still heading south, as per the chart:

Highlights

Factory orders rose 1.9 percent in a March report that is widely mixed yet fundamentally favorable. The least favorable reading in the report is a modest 0.3 percent rise when excluding transportation durables where however gains for aircraft, especially during the 737 Max grounding, are very welcome as was a strong gain in car and truck orders. The best news in the report is a 1.4 percent surge in orders of core capital goods (nondefense ex-aircraft) that hints strongly at second-quarter acceleration for business investment.

Inventories rose 0.4 percent in the month and though shipments jumped 0.7 percent, the inventory-to-sale ratio held unchanged at 1.36. Unfilled orders rose 0.2 percent and though a modest rate, is nevertheless welcome given what has been a long flat trend for this reading.

The strength of this report was signaled last week by advance data on the durables side of the manufacturing sector, where March orders growth is revised down 1 tenth to a nevertheless very sharp 2.6 percent gain. Nondurables are the fresh information in the report and they rose a strong 1.1 percent in March in a gain tied in part to higher prices for petroleum and related products.

The President’s tariff war initiated to enhance manufacturing seems to instead be undermining it:

Here we go again. The exporters remain firmly in control, looking to depress domestic consumption and keep wages in check by fear mongering about the public debt has not abated:

Japan sales tax to rise as planned

(Nikkei) Japan will raise the 8% consumption tax to 10% as scheduled in October, barring a major financial crisis, a top official in the ruling party told Nikkei. “I haven’t heard anyone say that we could see something on the scale of the Lehman shock,” Katsunobu Kato, head of the Liberal Democratic Party’s General Council, said Wednesday. “It’s appropriate for us to proceed as planned.” Prime Minister Shinzo Abe decided to delay planned increases in 2014 and 2016. This time, he has said the government will go through with the increase, barring a disruption on par with the 2008 crisis.

Global trade deceleration:

Hong Kong’s Q1 growth slips to slowest in a decade

(Nikkei) Hong Kong’s real gross domestic product rose 0.5% on the year in the January-March quarter. The economy expanded at the slowest rate since July-September 2009, and decelerated markedly from a 1.2% increase reported for the fourth quarter of 2018. Consumption edged up 0.1% on the year last quarter, compared with a 2.7% gain in October-December. Exports of goods fell 4.2%, while imports dropped 4.6%. Rapid growth in January-March 2018, which came to 4.6%, also left less room for improvement, according to the spokesperson.

How about this!!!

https://www.perdue.senate.gov/imo/media/doc/MMT%20Resolution.pdf

Share

Trade, Housing affordability, China, BOJ equity buying, Retail comment

Posted on by

Imports and exports both decelerating indicates a weaker global economy, and weak US retail sales indicates domestic consumer spending growth is slowing:

Highlights

First-quarter GDP looks to get a major boost from improvement in the nation’s trade deficit which, for February, came in at much lower-than-expected $49.4 billion. And the positives are more than just a technical calculation as exports, driven by aircraft, jumped 1.1 percent in the month on top of January’s 1.0 percent gain.

Exports of goods rose 1.5 percent to $139.5 billion as civilian aircraft rose $2.2 billion in the month. Outside of aircraft, however, gains are less striking with auto exports up $0.6 billion and with monetary gold and consumer goods showing marginal gains. For farmers, the results are slightly in the negative column with exports down $0.2 billion. But exports of services, at $70.1 billion in the month and usually a reliable plus, rose 0.3 percent.

Imports rose only 0.2 percent in the month, totaling $259.1 billion but with consumer goods showing yet another large increase of $1.6 billion in the month. Imports of industrial supplies fell $1.2 billion despite a 0.8 billion rise in the oil subcomponent. Imports for other categories were little changed.

Bilateral country deficits show a sharp decline with China, down $24.8 billion in unadjusted monthly data that are hard to gauge given strong calendar effects during the lunar new year. But year-to-date, the deficit with China is at $59.2 billion and down sizably from $65.2 billion in the comparison with the 2018 period. February’s deficit with both the European Union and Canada narrowed while deficits with Japan and especially Mexico, at $7.4 billion vs January’s $5.8 billion, deepened.

Today’s results are certain to lift first-quarter GDP estimates which had been roughly at the 2 percent line. The average deficit for the first two months of the quarter is $50.3 billion which is well under the $55.6 billion monthly average in the fourth quarter. And the easing deficit with China may well ease immediate tensions in U.S.-Chinese trade talks.


Interesting as debt service and financial burdens ratios remain historically low:


They’ve made fiscal adjustments that may be kicking in:

Bank of Japan to be top shareholder of Japan stocks

Bank of Japan to be top shareholder of Japan stocks (Nikkei) The BOJ held over 28 trillion yen ($250 billion) in exchange-traded funds as of the end of March — 4.7% of the total market capitalization of the first section of the Tokyo Stock Exchange. Assuming that the bank maintains its current target of 6 trillion yen in new purchases a year, its holdings would expand to about 40 trillion yen by the end of November 2020. This would place it above the GPIF’s TSE first-section holdings of more than 6%. The BOJ has likely also become the top shareholder in 23 companies through its ETF holdings. It was among the top 10 for 49.7% of all Tokyo-listed enterprises at the end of March.

This could explain why same store sales have been growing by about 5% year over year:

CNN: American retailers already announced 6,000 store closures this year. That’s more than all of last year.

Share

Rate policy, Wholesale inventories

Posted on by

While there’s no dispute that there’s been a substantial global economic slowdown, stocks have been doing well due to investor belief that Fed will be there with lower rates to stem the deceleration and reignite growth.

However, seems obvious to me that the Fed’s tools- low rates and QE- aren’t all they are cracked up to be, as per Japan, the euro zone, and the US for the last 10 years.

To the contrary, seems to me the Fed may be confusing the accelerator with the brake, as the govt. is a net payer of interest to the economy on $20+ trillion of outstanding treasury securities and interest bearing reserves. That means rate hikes add interest income to the economy as they increase the federal budget deficit, and rate cuts likewise remove interest income from the economy.

Highlights

There are few indications of economic slowing that are more convincing than an unwanted build in inventories — and that apparently is what’s underway in the wholesale sector. Wholesale inventories jumped 1.2 percent in January to far exceed anyone’s expectations and are up 7.7 percent year-on-year. Confirmation that this is unwanted comes from sales in the sector which did rise 0.5 percent in January but follow a long stretch of contraction. Year-on-year, sales are up only 2.7 percent. The sector’s stock-to-sales ratio continues to climb, at 1.34 vs 1.33 in December and against 1.28 in January last year. Today’s data confirm the wisdom of the Federal Reserve’s cautious outlook.

Share

US manufacturing, and growth forecasts, LA port traffic, Japan trade

Posted on by

Decelerating global trade hitting home:

U.S. manufacturing sector slowing as economy loses steam

(Reuters) The Fed said manufacturing production dropped 0.4 percent last month. January was revised up to show output falling 0.5 percent instead of slumping 0.9 percent. Production at factories increased 1.0 percent in February from a year ago. Motor vehicles and parts output slipped 0.1 percent last month after tumbling 7.6 percent in January. Excluding motor vehicles and parts, manufacturing output fell 0.4 percent last month. Capacity utilization for the manufacturing sector fell to a nine-month low of 75.4 percent in February from 75.8 percent in January.

Economists Cut Forecasts for Jobs and Economic Growth in Early 2019

(WSJ) Private-sector economic forecasters surveyed in recent days expect U.S. economic output to grow, on average, at a 1.3% pace in the first quarter. That is a sharp drop from the last survey, in early February, when they predicted a 2% growth rate for the January-to-March period. 84.2% said they saw a greater risk that the economy would grow more slowly than that it would grow more quickly over the next 12 months. When asked about the biggest downside risk to their forecasts, 46.8% mentioned trade policy or China.

LA area Port Traffic Down Year-over-year in February

Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.

On a rolling 12 month basis, inbound traffic was down 0.8% in February compared to the rolling 12 months ending in January. Outbound traffic was down 1.2% compared to the rolling 12 months ending the previous month.

Exports and imports fading:

Japan logs goods trade surplus of 339 billion yen in February

(Kyodo) Exports fell for the third straight month in February, slipping 1.2 percent to 6.38 trillion yen. Imports declined 6.7 percent to 6.05 trillion yen. China-bound exports increased 5.5 percent from a year prior, but that failed to make up for a 17.4 percent plunge in January. Japan’s trade surplus against the United States shrank to 624.9 billion yen as a 4.9 percent rise in imports such as aircraft outpaced a 2.0 percent increase in exports. With the European Union, Japan had a trade surplus of 58.2 billion yen as exports grew 2.5 percent while imports edged up 0.5 percent.

BOJ stands pat but downgrades view of output and exports

(Nikkei) “The Chinese economy is decelerating,” Gov. Haruhiko Kuroda said. But “stimulus steps are already being taken by the government. Their effects will show up in due course. Many believe that will be in the latter half of this year,” he added. “There are risks to the global economy. They need to be monitored carefully. But continued gradual growth remains our main scenario.” The BOJ downgraded its view of exports and output, saying they have been showing weakness recently. Previously, the central bank described export and output conditions as being “on an expanding trend.”

Economists Cut Forecasts for Jobs and Economic Growth in Early 2019

(WSJ) Private-sector economic forecasters surveyed in recent days expect U.S. economic output to grow, on average, at a 1.3% pace in the first quarter. That is a sharp drop from the last survey, in early February, when they predicted a 2% growth rate for the January-to-March period. 84.2% said they saw a greater risk that the economy would grow more slowly than that it would grow more quickly over the next 12 months. When asked about the biggest downside risk to their forecasts, 46.8% mentioned trade policy or China.

Share

Small business index, BOJ on trade, China, Atlanta Fed

Posted on by

Trumped up expectations largely reversed:

Highlights

At 101.7, the small business optimism index fell short of expectations in February, recovering only 5 tenths of January’s 3.2 point dip. Econoday’s consensus was looking for 102.5 with the low estimate at 101.8. Employment plans lost ground for a second straight month with a turn lower for earnings trends the biggest negative in the month. One plus is that the he outlook for economy, after dropping sharply in January, did turn positive in the month.

Bank of Japan weighs gloomier view of exports and output

(Nikkei) “We have no choice but to recognize that recent export and production trends are weak,” said a top official at the central bank, a view echoed by other senior officers there. In January, exports dropped 5.2% from the previous month in real terms, according to BOJ data, and the economy ministry’s index of industrial production shrank for a third straight month. The BOJ at its January policy meeting that both exports and industrial production were “on an increasing trend,” but it is considering revising that language during the two-day meeting ending Friday.

Sentiment among large Japanese companies plunges in 1Q 2019

(Nikkei) The Business Survey Index of large companies across all industries stood at minus 1.7 in the first three months of 2019. That is a 6-point drop from the October-December period of 2018. A negative reading means there are more companies that think business conditions are getting worse than there are that think things are improving. The Business Survey Index for Japan’s manufacturing sector, which relies heavily on exports, dropped to minus 7.3 from positive 5.5. Among large companies, the second quarter forecast is minus 0.3, and the period from July to Sep. is plus 5.7.

China’s top property developers see plunging sales in February

(Xinhua) China’s top 100 real estate developers saw a sharp monthly decline in its total sales due to the Spring Festival holiday. The total sales volume of China’s top 100 property developers was down by 22.9 percent month-on-month, and 11 percent year-on-year in February, according to China Real Estate Information Corp (CRIC). Floor area sold by Vanke, China’s housing market giant, plunged 22 percent to 2.47 million square meters, with the sales falling 12 percent to 43.19 billion yuan (around 6.4 billion U.S. dollars) month-on-month.

China car sales drop 17.4% in February to 1.22m units

(Nikkei) Sales of passenger cars fell 17.4% to 1.22 million units in February, China Association of Automobile Manufacturers, or CAAM, said. Sales of passenger cars and commercial vehicles fell 13.8% to 1.48 million units, while commercial vehicles saw an 8% increase during the month. The sales in February were hurt by weak demand during the Chinese New Year, CAAM said. The slump in February marks the eighth straight monthly decline in auto sales. Vehicle sales in China fell 15.8% in January, following a 2.8% decrease last year.

GDP forecasts are low and falling:

Share

Japan outlook, Rail traffic, Business inventories

Posted on by

Japan downgrades industrial outlook for first time in 40 months

(Nikkei) The Japanese government on Thursday downgraded its monthly assessment of industrial output for the first time in more than three years. The Cabinet Office’s economic report for February says “weakness can be seen in some areas” of production, qualifying a view of moderate growth that had been kept unchanged since October 2015. February’s report also downgraded the assessment on corporate profits. It follows January’s downward revision on exports, which are now described as “almost flat,” and raises doubts about the durability is poised to become Japan’s longest postwar economic expansion.

Rail Week Ending 16 February 2019: Economically Intuitive Sectors In Contraction

Week 7 of 2019 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors rolling averages are now in contraction.

Highlights

Volatility is increasingly the theme of recent economic data, including wholesale inventories which bloated by 1.1 percent in December against a 1.0 percent decline in wholesale sales. The inventory rise is not the result of price swings in nondurable goods as durables lead the build at a very heavy plus 1.5 percent including large builds for metals, furniture, electrical goods, and lumber.

The relationship between inventories and sales in the wholesale sector began to look unfavorable in November and really points to overhang in this report. Year-on-year, inventories are up 7.3 percent while sales are down 1.5 percent. The stocks-to-sales ratio spiked through the second of last year, to 1.33 in December from 1.30 and 1.28 the prior two months and from as lean as 1.26 in August.

The jump in wholesale inventories will provide a technical boost to fourth-quarter GDP but not a healthy one. Wholesalers may very well be looking to make their inventories more lean this year which would not be a plus for the sector’s employment. In an offset, comparable data on retail and manufacturing inventories, still not updated for December, showed less upward pressure in prior reports.

Share

*exports to China, Philly Fed, US home sales, durable goods orders

Posted on by

Asia’s exports to China plunge as economy stumbles

(WSJ) Japan’s exports to China in January sank 17.4% on the year to 958.1 billion yen ($8.65 billion), accelerating from December’s 7% drop. South Korean exports to China in January slid 19% on the year, a steeper rate than in the previous two months of decline. Taiwan’s mainland-bound shipments, which make up 40% of its total, also fell for the third consecutive month in January by 7.5%. Singapore suffered a 25% plunge. Thailand saw a second straight monthly drop in December, declining 7.3% on weaker exports of IT components. Vietnam was the odd man out, with its first increase in three months in January.

The global slowdown includes the US:

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.2 percent from December to a seasonally adjusted annual rate of 4.94 million in January. Sales are now down 8.5 percent from a year ago (5.40 million in January 2018).


Not good:

Highlights

The 1.2 percent headline rise in December durable goods masks weakness for business investment. New orders for core capital goods sank an unexpected 0.7 percent that falls well below Econoday’s consensus range. Magnifying what may be an emerging pivot lower for capital goods is a sharp downward revision to November, now at minus 1.0 percent.

Significant declines for a second month in a row were posted by machinery, computers as well as communications equipment which are all central to the capital goods group. But these are orders. Shipments of core capital goods actually rose 0.5 percent which will help offset a 0.2 percent shipment decline in November and may actually give a small boost to nonresidential fixed investment in next week’s fourth-quarter GDP report.

Jumping more than 50 percent, aircraft orders, as they often do in the durable goods report, skewed December’s headline higher. Vehicle orders were also strong, rising 2.1 percent and, together with the previously released vehicle surge in the manufacturing component of the industrial production report, point to a burst of late-year activity in the auto sector. But when excluding aircraft and vehicles as well as all other transportation equipment, orders inched only 0.1 percent higher in December vs Econoday’s consensus for a 0.2 percent gain.

An underlying softness is also indicated by total unfilled orders which have posted small declines in each of the last three reports. Unwanted inventories, however, do not appear to be a threat, rising only 0.2 percent vs a 0.8 percent increase for total shipments that pulls the inventory-to-shipments ratio down to 1.60 from November’s 1.61.

The factory sector was the economy’s star performer in 2018 and, on the surface at least, ended the year in strength especially for autos. But the weakness in business investment, and its negative implications for future productivity, point to hesitance among businesses which is consistent perhaps with easing indications for business confidence.

Flattened out below 2008 levels, not adjusted for inflation:

Share