The advanced numbers for December 2008 Durable Goods were released today and they were considerably worse than expected. The headline numbers were as follows:
The following chart shows how Shipments have been trending ever lower. Note that despite shipments of consumer electronics increasing for the holiday selling season, it wasn't nearly enough to affect the rapidly declining trend.
This next chart looks at New Orders. Another plunging trendline.
New Orders fell over 7% from November to December which seemed like rather brutal drop. This prompted me to recast the chart above into one that tracks the percent change from month to month.
It is easier to see now that December's move was one of the biggest in percentage terms since the middle of 2007. Unfortunately, that move was down and serves to more than negate the positive move seen in the previous month.
The next chart shows total inventories. The increase in inventories has been inexorable and has reached the highest level in three years.
Conclusion --
Tech is still in a tough situation. Summarizing what we have seen in the charts we have the following points:
The rise in inventories is another troubling sign. By the time demand begins to return, there will be high levels of inventories to be worked through before the tech industry can begin to really ramp up production. In the meantime, the industry will continue to run at low capacity, depressing margins.
The conclusion is that a recovery in tech is unlikely in the near term. Given the continued drumbeat of layoff announcements, it appears that tech industry management feels the same way.
- New orders for manufactured durable goods in December decreased $4.7 billion or 2.6 percent to $176.8 billion.
- Shipments of manufactured durable goods in December, down five consecutive months, decreased $1.4 billion or 0.7 percent to $191.3 billion.
- Unfilled orders for manufactured durable goods in December, down three consecutive months, decreased $10.3 billion or 1.3 percent to $803.2 billion.
- Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $1.3 billion or 0.4 percent to $343.5 billion. This was at the highest level since the series was first stated on a NAICS basis in 1992.
The following chart shows how Shipments have been trending ever lower. Note that despite shipments of consumer electronics increasing for the holiday selling season, it wasn't nearly enough to affect the rapidly declining trend.
This next chart looks at New Orders. Another plunging trendline.
New Orders fell over 7% from November to December which seemed like rather brutal drop. This prompted me to recast the chart above into one that tracks the percent change from month to month.
It is easier to see now that December's move was one of the biggest in percentage terms since the middle of 2007. Unfortunately, that move was down and serves to more than negate the positive move seen in the previous month.The next chart shows total inventories. The increase in inventories has been inexorable and has reached the highest level in three years.
Conclusion --
Tech is still in a tough situation. Summarizing what we have seen in the charts we have the following points:
- Shipments continue to fall though not so much as the previous month. The trend, however, remains clearly down.
- New Orders plunged in December. The trend here is also down.
- The buildup in Inventories continues unabated
The rise in inventories is another troubling sign. By the time demand begins to return, there will be high levels of inventories to be worked through before the tech industry can begin to really ramp up production. In the meantime, the industry will continue to run at low capacity, depressing margins.
The conclusion is that a recovery in tech is unlikely in the near term. Given the continued drumbeat of layoff announcements, it appears that tech industry management feels the same way.
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