Orders Up, Unemployment Down

Seeing is believing is the only thing possible when we are in need of concrete evidence, since nothing else is convincing! Doubting Thomas-es that were all of us, most days and probably rightly so! But, if the recent developments in US factory orders and the unemployment rate are anything to go by, we might be in store for an improvement in the economic outlook of the country, at least some might have us believe that. Factory orders are up and unemployment is down. But, is the US economy on track for improving. Nothing is for certain, yet.

US Factory Orders

US Factory Orders

US Factory Orders

Orders in US factories were on the increase by 1.5% in June according to figures released today by the Commerce Department. Analysts had predicted a 2.3%-rise so it is well under that but nonetheless up. New orders increased therefore by $7.6 billion to $496.7 billion. However, there was a better than expected increase in May that amounted to 3%. Those figures show an all-time high for a two-month period that has not been seen since 2008. Are those trends starting now to change and will we see a reversal of the recessionary effects on the US economy?

In the early part of 2013 manufacturing had severe painstaking trouble to show any sort of growth in the face of a general global slowdown in the economy with China especially suffering from contraction. But, it was also held back by US spending cuts. Spending cuts amounted to $85 billion and took effect in March 2013, although $4.9 billion was later taken off of those cuts.

In particular:

  • Durable-goods orders increased by 3.9% in June. There had been a forecast of 4.2% which has not been met.
  • Nondurable goods (chemicals, and food, for example) dropped by 0.6% in June. There had previously been a rise of 0.8% in May 2013.
  • Machinery orders increased by 2.6% in June 2013.
  • Transport-related orders rose by 12%.
  • Car demand increased by 2%.
  • Purchases of new homes rose by 8.3% and the annualized level of 497, 000 homes is the highest since May 2008.

    US Unemployment

    US Unemployment

Unemployment

Unemployment figures released today show that unemployment has fallen in the US marginally by 0.2% from 7.6% to 7.4%.

There was a 162, 000-increase in payrolls in July and this was the lowest rise for the past quarter. Estimates had been at the 185, 000-mark ad so despite the gains in employment, there seems to be some worry that the economy is not picking up speed as it should be.

The retail industry had the biggest gains with 47, 000 people finding employment.

If growth continues, then the sluggish drag on the economy could be gotten over. But, the economy is still not growing enough to reduce unemployment substantially at the moment. The annual rate from the April-June period stood at just 1.7%. That’s a slight increase on the 1.1%-growth experienced in the first quarter, but still far from adequate.

Seeing is believing then, but it looks as if we can’t quite see that far enough ahead for the moment on the way things are going in the US economy. The results today are mitigated and will certainly once again maintain the Federal Reserve’s tapering of Quantitative Easing firmly at the forefront of the agenda at least if only in the debate.

Orders are up and unemployment is down, but where’s the US right now?
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tothetick

Professional team of writers/analysts analyzing the financial markets.

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