Durable Goods Orders Experience Another Downward Adjustment

Despite the positive news from PMIs yesterday, the 'hard' data released this morning confirms the positive trend with preliminary Durable Goods orders for April showing a 0.7% month-on-month increase, against an expected decrease of 0.8%. However, in line with the trend of Bidenomics, the 2.6% month-on-month increase in orders for March was revised down to a 0.8% rise. This marks the third consecutive month of month-on-month gains for new orders of durable goods, pushing the nominal year-on-year increase to 1.3%.

Revisions in Durable Goods Orders

Over the past 14 months, there have been nine instances where the orders for durable goods have been revised downwards. Notably, these downward revisions have been significantly larger than any upward adjustments.

Commercial Aircraft Bookings Decrease

The report from the Commerce Department indicated a decrease in bookings for commercial aircraft, which are known to fluctuate from month to month. After recording solid gains in the previous two months, bookings fell by 8% in April. Boeing Co. reported a significant decrease in orders, from 113 in March to just seven in April. The company's executives have warned that production will be inconsistent in the first half of 2024 due to increased inspections for defects, sequential work performance, and supplier shortages.

Additional Downward Revisions

The headline data was not the only figure to be revised downwards. The 0.2% month-on-month increase in Durable Ex Transports for April was revised to no change for March. Additionally, Orders non-defense ex-aircraft was also revised from a 0.1% month-on-month increase to a 0.1% decrease. Capital Goods shipments non-defense, ex-aircraft was revised from no change to a 0.3% month-on-month decrease, representing a significant drop for a key indicator of business spending and GDP.

Questioning the Frequency of Downward Revisions

The frequency of these downward revisions raises questions about the potential manipulation of data. How many times can a data series be revised downwards before suspicions of manipulated data transition from theory to accepted 'standard operating procedure'? In conclusion, the continuous downward revisions of durable goods orders raises questions about the reliability of initial data and the potential for manipulation. It's interesting to consider the implications of these revisions on our understanding of economic trends. What are your thoughts on this matter? Please share this article with your friends and engage in the discussion. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.