Friday, April 24, 2009
continued deterioration in durable goods
UPDATE: via zero hedge -- david rosenberg considers what's in the pipeline.
This financial crisis and deep recession has the economic outlook shifting so rapidly that the economic data flow, no matter how timely, is being rendered old news before it is even released. No piece of data exemplifies this more than today’s durable goods report for March. While it was far from a good report, the fact that orders ‘only’ fell by about half of what was expected fed the greenshooters’ case that we are starting to turn the corner. But this info is now stale news given GM’s tape bomb: a complete shutdown of production for the balance of the second quarter.
What this means is the ISM could retest the 32.9 cycle low in May or June, even though the April ISM figure could well move higher when it is reported next Friday. In all, we are expecting vehicle production to be down 45% compared to last year, even factoring in Ford’s news that it would up production by 25%. The GM shutdown does not just mean more layoffs at their assembly plants; it will ripple across the parts industry as well. If parts manufacturers take similar production hits it could reduce motor vehicle payrolls by 140k. Chrysler has not released any new production intentions but with the specter of bankruptcy looming, could trim their 2Q production plans as well.