Before we get to durable goods, I last noted manufacturing data seemed to indicate that the mini-cycle related to inventory appeared to be a desperately short two month uptick. This restocking (if that was what took place) was seen in various surveys and releases, notably the ISM indices and factory orders.

The latest data for March corroborates a renewed downward trend across manufacturing. First, the Chicago Fed National Activity Index fell below 0, to -0.23 from +0.76 the previous month. A reading of 0 indicates activity in manufacturing at “trend”. If the past few months do indeed mark a turning point in the mini cycle, it would be the lowest or least “above trend” in the recovery period, and a level consistent with cyclical inflection.

ABOOK Apr 2013 Dur Goods Chicago Fed CFNAI

The Markit PMI for US manufacturing also shows a similar dynamic, particularly the mini-cycle. April’s reading of 52.0 is down from 54.6 in March, marking the lowest level since October 2012, closing in on the cycle lows from last summer. New orders fell from 55.4 to 51.8.

ABOOK Apr 2013 Dur Goods Markit

Durable Goods data from the Census Bureau was appreciably worse in every respect. The headline, adjusted figure was down 5.7% from a downwardly revised February. Ex Transportation, orders decreased 1.4%, while ex Defense orders dropped a remarkable 4.7%. Not surprisingly, inventories of manufactured durable goods hit their highest level since the series was first published, but the pace of expansion was only 0.1% (consistent with a down leg in the mini cycle). Year-to-date, total new orders are running 0.1% behind 2012.

Ex Transportation, durable goods experienced a very small rebound in January before resuming the downward trend.

ABOOK Apr 2013 Dur Goods ex Trans No Rebound

These levels indicate demand for manufactured products at levels more consistent with recession than any stage of growth.

ABOOK Apr 2013 Dur Goods ex Trans Longer Term

In fact, since August, the average pace of new orders and shipments compares most closely with actual recessionary periods; well below recovery or growth periods. Average Y/Y growth in shipments was 9.32% in 2011; 8.71% for new orders. The current pace is even far below the beginning stages of the Great Recession (from December 2007 to August 2008).

ABOOK Apr 2013 Dur Goods ex Trans Comps

The downward trend is even more pronounced in the capital goods segment, as is the mini cycle noted above.

ABOOK Apr 2013 Dur Goods Cap Goods Mini Cycle

The first three months of 2013 are the worst start to a calendar year since 2009.

ABOOK Apr 2013 Dur Goods by Month

Orders for non-defense capital goods year-to-date are currently running 3.5% below 2012’s anemic pace. Orders for the transportation segment as a whole year-to-date are running 0.9% behind last year. While automobile production has rebounded from last summer’s pause, aircraft production (despite the volatility) is now well-below trend.

One final note from durable goods: as I noted previously the collapse in PC’s apart from smartphone adoption, the current data here indicates that weakness is more macro than technologically-driven consumer preferences and therefore representative of weakness in overall end market demand.  Total year-to-date orders for computers and electronic products are running cumulatively 11.1% below the first three months of 2012. Shipments of computers and electronic products are down 2.9% for the same comparable periods.