Wednesday Market Note: Manufacturing Signaling a Double Dip?

In has thus far been a pretty quiet summer week on Wall Street, despite being smack in the middle of earnings season. Volume has been low, indicating that investors aren't willing to wager that the economy is simply slowing, versus headed for a double dip.

The news this morning doesn't clarify the outlook: durable goods - items meant to last longer than three years - tumbled one percent, from -0.8 percent in May. It was the largest drop since August, 2009. Economists also measure durable goods without transportation because that sector is so volatile. Without transportation, the decrease was 0.6 percent from up 1.2 percent in May.

The report begs the question: can the economy recover with weakening manufacturing? The durable goods report, along with yesterday's Richmond Fed survey, paint a picture of slowing growth in the manufacturing sector is slowing. Manufacturing has been touted as one of the leading sectors of the economic recovery.

But there was one bright spot in the durable goods report and that was capital orders. Orders and shipments for non-military capital goods, excluding aircraft climbed 0.6 percent in June, after jumping 4.6 percent in May. This could be a signal that business investment could see improvement over the next two quarters.

Bottom line: with growth slowing at an as-yet undetermined rate, investors are taking the wait and see approach

[sjc_1]

The classical macro economic model says that you have a dip in inventory during recessions and then that has to be filled during expansions. It is just a refilling of inventory and does not necessarily mean a "double dip" recession, just an oscillation.

[Smokey75]

Hey all you Libs how is Obama's spendanomics working out! I believe every educated economist predicted this when Obama passed his porkulous bill last year.

Oh I am sure your just dying to scream "But Bush" don't bother if we go into a double dip Obama owns it. This is his economy he is the one who said we needed to spend trillion dollars or we all would parish. Well we spent his trillion and it did nothing but pay back his union thug bodies for getting him elected.

[tsigili]

What manufacturing??? For all intents and purposes, the US government allowed corporate America to send all of our manufacturing off shore.

As a result, we cannot get out of this depression.

So much for the common sense of government.