Manufacturing Points to Weakening Economy

The Chicago Purchasing Managers Index carried a clearly negative message Tuesday, with the Institute for Supply Management (ISM) saying, "key aspects of the report pointed towards a weakening economy." While the sector of the American economy remains secondary to services, it still offers insight into the domestic economy.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative Tickers include NYSE: BA, NYSE: RTN, NYSE: DGI, NYSE: GY, NYSE: GD, NYSE: GR, NYSE: NOC, NYSE: HON, NYSE: LMT, NYSE: COL, NYSE: LLL, NYSE: ERJ, Nasdaq: FLIR, Nasdaq: BEAV, NYSE: TDG, NYSE: SPR, NYSE: CAE, NYSE: ATK, NYSE: HXL, NYSE: TGI, NYSE: ESL, NYSE: MOG-A, NYSE: HEI, NYSE: TDY, NYSE: CW, Nasdaq: CVCO, NYSE: SKY, Nasdaq: NOBH, Nasdaq: PHHM, NYSE: MHK, Nasdaq: IFSIA, NYSE: AIN, NYSE: UFI, NYSE: ITW, NYSE: TYC, NYSE: CMI, NYSE: KUB, NYSE: IR, NYSE: DOV, NYSE: ITT, NYSE: FLS, NYSE: PLL, NYSE: DRC, NYSE: SPW, NYSE: GDI, NYSE: IEX, Nasdaq: NDSN, NYSE: GGG, NYSE: ATU, Nasdaq: MIDD, NYSE: ABB, NYSE: ETN, NYSE: NJ, NYSE: ROK, NYSE: AME, NYSE: RBC, NYSE: TMB, Nasdaq: WGOV, NYSE: CAT, NYSE: DE, NYSE: CNH, Nasdaq: JOYG, Nasdaq: BUCY, Nasdaq: AGCO, NYSE: EMR, NYSE: PH, NYSE: ROP, NYSE: PNR, NYSE: WM, NYSE: RSG, Nasdaq: FAST, NYSE: VMC, NYSE: MDU, NYSE: MLM, NYSE: OC, NYSE: VAL, NYSE: PCP, NYSE: X, NYSE: RS, NYSE: NVR, NYSE: DHI, NYSE: PHM, NYSE: TOL, NYSE: HOV, NYSE: CRH, NYSE: CX, NYSE: EXP, NYSE: FLR, NYSE: MDR, Nasdaq: FWLT, NYSE: ICA, NYSE: SWK, NYSE: TKR, NYSE: KMT, NYSE: LUK, NYSE: MAS, NYSE: WY, NYSE: PWR, NYSE: CBI, NYSE: EME, NYSE: SNA, NYSE: TTC, NYSE: GM, NYSE: F.

Manufacturing Economy Weakening

The Chicago PMI Business Barometer Index dropped to 60.2 this month, from 62.2 in December. It was yet another economic data point leaving economists looking lost. Economists surveyed by Bloomberg were expecting the index to rise to 63.0. More importantly, the decline leaves them to survey whether indeed the economy is slipping into just a slow slug growth rate like the Federal Reserve expects or into a legitimate recession.

The service sector continues to dominate the American economy, and so the manufacturing sector remains secondary today. It also has been buoyed by global demand, and so is an imperfect measure of domestic well-being. Still, however loose a tie manufacturing has to the domestic marketplace, it represents a great hope for many. President Obama, for one, is hopeful America might move forward to restore its industrial base, with a keen eye toward alternative energy. Mitt Romney, who appears set to win the Florida GOP debate, is willing to go a step further to ensure American companies have a better footing with perennially accused trade cheater China. Manufacturing is clearly an important cog for American economic progress. The leaner sector, which clearly benefited from the financial crisis and recession driven restructuring of organized labor contracts like those at General Motors (NYSE: GM) and Ford (NYSE: F), might just have a chance given some of these described actions and other plans for it.

Looking at the Chicago PMI Report, each component measure declined to a less expansionary point, with the seasonally adjusted New Orders Index falling to 63.6, from 67.1 in December. New Orders are of course a critical indicator of the road ahead. Because of the slower pace of ordering, Order Backlogs fell into territory marking economic contraction, with that component index at 48.3 now, from 57.3 in December. The shares of important industrials General Electric (NYSE: GE), Honeywell (NYSE: HON), Caterpillar (NYSE: CAT) and Deere (NYSE: DE) were all in the red Tuesday as a result.

Further inspection of the data shows the Production Index eased to 63.8 from 64.9 in December. The Inventories Index likewise fell to 51.6 from 52.0 in December. Perhaps of greater interest to most, the Employment Index declined to 54.7 from 59.2 in December, showing less propensity to hire among manufacturers. This certainly played a role in the slippage of employment services stocks Tuesday, with Monster Worldwide (NYSE: MWW), Korn Ferry (NYSE: KFY) and Manpower (NYSE: MAN) down approximately 2% to 3% each.

Supplier Deliveries improved, but this only says to me that there exists an environment of less demand. However, Production Material lead time lengthened significantly, which would counter that argument unless production material capacity has been left idle due to slowing demand. I expect there are some seasonal issues at play here, for instance, with regard to irregular maintenance of facilities and plants that may be occurring now.

Further observance of the manufacturing sector is advised now, as it may show the impacts of European strife and the global slowing described, warned of, and expected by the World Bank and IMF, not to mention by yours truly. Wednesday, we’ll receive the ISM Manufacturing Index, which will offer a better national view, where the Chicago PMI measures the Midwest. With regard to ISM’s report for January, economists are once again looking for improvement, with the index seen rising to 54.5, from 53.9 in December. I expect another let down is pending, and that manufacturing is indeed finding a slower growth point for now.

There are all sorts of pressures on the sector, especially within defense, where the U.S. and many other nations are reducing funding. Though shares of Raytheon (NYSE: RTN), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and Alliant Techsystems (NYSE: ATK) traded mixed Tuesday. Still, with fewer orders coming to manufacturers from both private and public sectors, it seems the world may take a break from its fantastic global development of the last decade.

This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Industrials Party Crashed by the Bear

Investors celebrated the Durable Goods Orders data for the month of August on Wednesday morning, as non-defense capital goods orders excluding aircraft climbed 1.1%. The segment representing business investment had declined 0.2% in July and raised a red flag on the economy. Thus, this recovery was counter-relative and a relief to market participants, at least until stocks turned sour universally in the afternoon. There are important considerations that might dilute the punch of this data longer term if they prove true in the months ahead. I expose that risk for you herein.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Industrials Party Crashed by the Bear

The first thing I do when reviewing such a data-point is to note if there was a significant revision to the prior months’ data. A sharp revision lower to the prior month can serve to provide illusory growth in the reporting period. However, in this case, and at least for the headline data, the revisions seemed to be minor and served to discount this month’s growth anyhow (they were revisions higher). I could not locate the pre-revision number with regard to nondefense capital goods excluding transportation segment, but the potential impact here should be considered by the reader.

Durable Goods New Orders declined 0.1% on the whole, which was disappointing against the economists’ consensus forecast for 0.2% growth in August. Still, the decline followed July’s 4.1% growth (revised from 4.0%), so the volatility of these irregular high-ticket priced orders is better smoothed when reviewed over more than a month. When excluding transportation, new orders fell by the same 0.1% seen in the headline figure in August, though this time beating the economists’ consensus for a drop of 0.2%. In July, the ex-transportation count increased by 0.7% month-to-month. Excluding defense, new orders also fell by 0.1% in August, though following a 4.8% increase in July.

Shipments fell 0.2% in August, after rising 2.1% in July. Excluding transportation, shipments gained 1.2%, off a drop of 0.6% in July. Excluding defense, shipments fell 0.4% in August, after their 2.5% increase in July.

Let’s get right to the market moving news. Non-defense capital goods orders ex-transportation increased 1.1% in August, following the 0.2% decline in July. In June, these orders rose 0.8%. The result of this news is raised economic hope and lowered expectations of recession, at least for Q3. Macroeconomic Advisors raised its GDP forecast to an annual rate of 2.1% for the third quarter, up from 1.7% previously; several economists did the same, due to this data.

However, there’s one key risk overhanging these projection upgrades and also on investment decisions based on economic gain expectations. Outside of the specific companies benefiting, I am not sure there will be much profiting in America. I expect much of this growth is on exports, goods sold to the emerging world. For as long as there is robust growth in India, China, etc., this data-point will not prove a timely harbinger of economic strife in the United States. Also, let’s not forget that the American manufacturing sector restructured significantly through the last recession, some through bankruptcy and some thanks to the government. Mostly, these improvements came on capacity contraction and union concessions. Thus, the manufacturing sector is more nimble today. And one should question how long the emerging world can sustain robust growth if American consumption retrenches further and European consumers gather into a shell. Christine Lagarde warned of this in a recent address given during her American tour.

Industry Sector Breakdown
Not all industrials saw a stellar August, and that was reflected in the day’s trading of some of the shares through midday. However, since about 1:00 PM Wednesday, stocks started lower across the board, and at 3:15 PM ET or so, the decline accelerated. Growth was certainly celebrated early though in the Aerospace/Defense Industry, which according to Yahoo Finance (Nasdaq: YHOO), was up 1.9% to 2.5%, depending on whether we’re talking about the major diversified companies or those listed in products and services. There was good reason for this, as the Durables Report showed a 22.5% increase in new orders. Still, Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL) and Boeing (NYSE: BA) ended down about 1% or so. The Dow was off 1.6%, to put this into relative perspective.

Computers and electronic products saw a 1.3% increase in new orders, and the shares of relative firms did well to start the day, but followed the general market track into the close. Of course, Amazon.com (Nasdaq: AMZN), which maintained a gain of 2.5%, had a strong company specific driver. Sony (NYSE: SNE) kept above water too though, rising 0.6%, perhaps on the durables report. However, Apple (Nasdaq: AAPL), which was firefighting against rumors and Amazon’s entry into the tablet market, declined 0.5% on the day. Dell (Nasdaq: DELL), also in the news, fell about 1.9%. Microsoft (Nasdaq: MSFT) was short just 0.4%, which again reflects relative outperformance against the broader indexes.

Manufacturing recorded a 0.7% increase in new orders, but the growth was specific to industry. Primary metals saw a 0.8% decline and fabricated metal products fell 0.5%. As a result, Arcelor Mittal (NYSE: MT) shares dropped 3.7%. Communication equipment orders improved 7.8%, but the shares of Cisco Systems (Nasdaq: CSCO) and Broadcom (Nasdaq: BRCM) fell 1.4% and 2.9%, respectively. Motor vehicles and parts saw an 8.5% drop, and the shares of Ford and GM fell 1.9% and 3.7%, respectively.

Another important sub-metric found in the durables report is the data on unfilled orders, which were up 0.9% for the second consecutive month. Some of these orders may prove to be in error, and when considering the dollar figures involved (a $7.6 billion increase in August), it’s worth noting. For the most part, this data is viewed as a positive, as it represents business in process. Inventory reached record levels (most since 1992), but this has a lot to do with population growth and emerging market development over time. Markets have grown and so have inventories. Still, excess ordering and fat inventories can lead to trouble when sideswiped by surprising economic recession.

In conclusion, the market had reason to celebrate this morning, but I suspect the caution that was reflected in the sharply downward close was likewise due. I expect that with time, we will find that the day’s market enthusing news seen in durables orders will be shown to be due to exports. Furthermore, there should be concern that this economic stabilizing force could soften over time, given consumer sentiment and economic conditions in both Europe and the United States.

This article should interest industrials investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Not So Fantastic Factory Orders

The market grew enthusiastic Wednesday on Factory Order growth that exceeded economists’ views. That’s because any news that contradicts with data showing softness in manufacturing, consumer mood or any other recently questionable economic measure offers hope. However, closer inspection of the data and a minute of critical thought should lead to the determination that this factory order report is not so fantastic.



Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.



Relative tickers: NYSE: BA, NYSE: RTN, NYSE: DGI, NYSE: GY, NYSE: GD, NYSE: GR, NYSE: NOC, NYSE: HON, NYSE: LMT, NYSE: COL, NYSE: LLL, NYSE: ERJ, Nasdaq: FLIR, Nasdaq: BEAV, NYSE: TDG, NYSE: SPR, NYSE: CAE, NYSE: ATK, NYSE: HXL, NYSE: TGI, NYSE: ESL, NYSE: MOG-A, NYSE: HEI, NYSE: TDY, NYSE: CW, Nasdaq: CVCO, NYSE: SKY, Nasdaq: NOBH, Nasdaq: PHHM, NYSE: MHK, Nasdaq: IFSIA, NYSE: AIN, NYSE: UFI, NYSE: ITW, NYSE: TYC, NYSE: CMI, NYSE: KUB, NYSE: IR, NYSE: DOV, NYSE: ITT, NYSE: FLS, NYSE: PLL, NYSE: DRC, NYSE: SPW, NYSE: GDI, NYSE: IEX, Nasdaq: NDSN, NYSE: GGG, NYSE: ATU, Nasdaq: MIDD, NYSE: ABB, NYSE: ETN, NYSE: NJ, NYSE: ROK, NYSE: AME, NYSE: RBC, NYSE: TMB, Nasdaq: WGOV, NYSE: CAT, NYSE: DE, NYSE: CNH, Nasdaq: JOYG, Nasdaq: BUCY, Nasdaq: AGCO, NYSE: EMR, NYSE: PH, NYSE: ROP, NYSE: PNR, NYSE: WM, NYSE: RSG, Nasdaq: FAST, NYSE: VMC, NYSE: MDU, NYSE: MLM, NYSE: OC, NYSE: VAL, NYSE: PCP, NYSE: X, NYSE: RS, NYSE: NVR, NYSE: DHI, NYSE: PHM, NYSE: TOL, NYSE: HOV, NYSE: CRH, NYSE: CX, NYSE: EXP, NYSE: FLR, NYSE: MDR, Nasdaq: FWLT, NYSE: ICA, NYSE: SWK, NYSE: TKR, NYSE: KMT, NYSE: LUK, NYSE: MAS, NYSE: WY, NYSE: PWR, NYSE: CBI, NYSE: EME, NYSE: SNA, NYSE: TTC, NYSE: GM, NYSE: F.

Not So Fantastic Factory Orders

Factory Orders rose 2.4% in July, ahead of economists’ views for 2.0% growth, giving life to stocks Wednesday. July’s growth offered hope in the place of the concern brought on by June’s revised order decline of 0.4% (revised from -0.8%). It also offered respite from the general worry brewed up by the recent Philly Fed Survey alarm, which exacerbated manufacturing sector concern.



However, July’s Factory Order growth will not perfectly relieve market pressures. It was, after all, mostly on high ticket transportation orders. Excluding transportation, new orders increased just 0.9%. Transportation equipment orders were up 14.8%, and durable goods orders rose 4.1%. This is good news of course, but it is important to note that nondurable goods orders were up 1.0% and that we are talking about July. More recent data, including the Philly Fed and ISM data, seem to indicate August may have been significantly less enthusing, if not downright depressing.



As I surveyed the list of industries reported upon individually, I noted many percentage changes with minus signs before them. For example, while primary metal goods orders were up 9.9%, machinery orders were down 0.2% and industrial machinery was short 13.8%. Where non-defense aircraft and parts orders were up 43.4%, computer and electronic products orders were off 3.4%. Electrical equipment, appliances and components orders fell by 2.3% and furniture and related products orders were flat. It’s possible that demand from Japan, driven by its rebuilding effort post its catastrophic earthquake, helped to lift some categories while others languished.



The Chicago Purchasing Managers Index was also reported Wednesday, and its Business Barometer Index deteriorated to a mark of 56.5, from July’s 58.8 level. This survey measures all business in the Chicago region, and a mark above 50 signifies there is regional strength in the Midwest. Perhaps this is the result of emerging market demand for autos and other goods manufactured in the U.S. In any event, it’s clear that the Midwest is holding up better now than the East Coast.



The Factory Orders data showed that inventory continues to build. In fact, inventory of manufactured durable goods was up nineteen consecutive months, and is currently at its highest level since the series was first published on a NAICS basis in 1992. Even while inventories were higher though, the inventory-to-shipments ratio improved to 1.32, from 1.33 in June. So premature inventory build would not seem to be a major problem, unless orders are cancelled.



While the market celebrates what’s worth a cheer, I cannot help but to advise readers to note the divergence between industries illustrated within the report. Also, given that since July, consumer confidence has deteriorated further and faith in the American economy has been shaken, we cannot necessarily party heartily before August and September’s results are shown. I have concern that an eventual loss of the temporary boost from Japanese rebuilding demands and also slowing emerging market demand for goods globally, which have been supports against a suspect American recovery, threaten to alter the trend in factory order growth in the months ahead. Indeed, I beckon you to beware that recession is a significant threat, and advise that I find this latest factory order data less than fantastic.



This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Manufacturing Recession Alarm Sounds

Even before the latest reporting of the Philadelphia Fed’s Business Outlook Survey, indicators of the manu- facturing sector had been flashing red. But in case you hadn’t noticed, the folks in Philadelphia got right up in our face this month with a reading for the region’s business activity that screams trouble. However, due to the extraordinary events that surrounded the period of survey, within which investors contemplated a nascent downgrade of American credit, the great depths of despair reflected this August may prove disproportionate to reality.



Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.



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Manufacturing Recession Alarm Sounds

The Philadelphia Federal Reserve Bank’s broadest measure of manufacturing conditions is its Diffusion Index of Current Activity. This month, it reached a depth last seen in March of 2009, when stocks bottomed out under a blanket of chaos and concern. The measure sank to negative 30.7 in August, deeply down from the positive 3.2 reading in July. But what do you expect when you survey businessmen between August 8 and 16, the first week following S&P’s downgrading of the United States’ sovereign debt rating. At that time, it appeared to most that Pandora’s Box had been opened, and global economic disintegration would result.



But businessmen were already on edge, as reflected by the Philly Fed’s July reading only slightly above break-even. Indeed, the ISM’s national measure of the manufacturing sector was also near indicating recession at last check. Released on August 1, ISM’s index flirted with it, touching 50.9, where a reading of below 50 would officially sound the alarm.



Generally, it appears that either all business activity froze the week of the Philly survey out of sheer panic or we are very clearly entering recession… or both. Respondents indicated that new orders dropped off sharply, with the New Order Index falling 27 points. Current shipments dropped as well, with the index measuring the activity falling 18 points. What’s more, the indexes for inventories, unfilled orders and delivery times were all in negative territory.



While we would expect employment to lag other indicators, considering that this month’s drop-off follows a trend of growth deceleration, what we discovered about employment in the manufacturing space is no surprise. While 18% of firms surveyed said they had increased their worker count this month, 23% said they had made cuts. The workweek index fell 9 points as well, but many factories shut down for maintenance work during the summer. Indeed, some 29% of the firms surveyed had scheduled summer month shutdowns this year.



The only good result of slowing business activity is a commensurate easing of pricing pressures, and the Philadelphia area respondents concurred. They saw prices paid ease, but prices received also declined. The Philly Fed remained relatively positive on the future outlook, but that was only because readings stayed in positive territory with that regard; they still dropped precipitously. To be precise, the measure of future activity, measuring expectations for the next six months, fell 22 points.



In general, the Philly Fed reports that they see a sharp decrease in demand for manufactured goods. However, the real question to ask is, how acutely did broad concern about the US debt downgrade affect the responses of survey respondents? I think we can expect that the chaos and concern that have characterized the last week and a half across the stock market have affected the mentality of all Americans and driven a shutdown of business activity in August. We’ve seen this reflected in stock prices, consumer sentiment measures and now in this survey of purchasing managers. This shutdown, following a freezing in July on the political wrangling around the debt ceiling issue, seems capable of driving the third quarter of 2011 into recessionary territory, in my view. So let’s all thank Washington and Wall Street (S&P), for once again being at the core of all that ills us.



This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Manufacturing Sirens Sound Alert

The Institute for Supply Management (ISM) today published its Manu- facturing Report on Business, with a disturbing trend only deter- iorating further in July. The manufacturing sector, that group of businesses that led the American economy out of the last recession thanks greatly to overseas demand for goods, moved dangerously close to economic contraction in July.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers: NYSE: BA, NYSE: RTN, NYSE: DGI, NYSE: GY, NYSE: GD, NYSE: GR, NYSE: NOC, NYSE: HON, NYSE: LMT, NYSE: COL, NYSE: LLL, NYSE: ERJ, Nasdaq: FLIR, Nasdaq: BEAV, NYSE: TDG, NYSE: SPR, NYSE: CAE, NYSE: ATK, NYSE: HXL, NYSE: TGI, NYSE: ESL, NYSE: MOG-A, NYSE: HEI, NYSE: TDY, NYSE: CW, Nasdaq: CVCO, NYSE: SKY, Nasdaq: NOBH, Nasdaq: PHHM, NYSE: MHK, Nasdaq: IFSIA, NYSE: AIN, NYSE: UFI, NYSE: ITW, NYSE: TYC, NYSE: CMI, NYSE: KUB, NYSE: IR, NYSE: DOV, NYSE: ITT, NYSE: FLS, NYSE: PLL, NYSE: DRC, NYSE: SPW, NYSE: GDI, NYSE: IEX, Nasdaq: NDSN, NYSE: GGG, NYSE: ATU, Nasdaq: MIDD, NYSE: ABB, NYSE: ETN, NYSE: NJ, NYSE: ROK, NYSE: AME, NYSE: RBC, NYSE: TMB, Nasdaq: WGOV, NYSE: CAT, NYSE: DE, NYSE: CNH, Nasdaq: JOYG, Nasdaq: BUCY, Nasdaq: AGCO, NYSE: EMR, NYSE: PH, NYSE: ROP, NYSE: PNR, NYSE: WM, NYSE: RSG, Nasdaq: FAST, NYSE: VMC, NYSE: MDU, NYSE: MLM, NYSE: OC, NYSE: VAL, NYSE: PCP, NYSE: X, NYSE: RS, NYSE: NVR, NYSE: DHI, NYSE: PHM, NYSE: TOL, NYSE: HOV, NYSE: CRH, NYSE: CX, NYSE: EXP, NYSE: FLR, NYSE: MDR, Nasdaq: FWLT, NYSE: ICA, NYSE: SWK, NYSE: TKR, NYSE: KMT, NYSE: LUK, NYSE: MAS, NYSE: WY, NYSE: PWR, NYSE: CBI, NYSE: EME, NYSE: SNA, NYSE: TTC, NYSE: GM, NYSE: F.

Manufacturing Sirens Sound Alert

ISM published its Manufacturing Index for July this morning, and offered a disappointing result which continued an ugly trend. While the manufacturing sector continued to expand, a point that should be made and is lost through much of the reporting of the popular press, the pace of sector expansion slowed dramatically in July.

Where economists surveyed by Bloomberg were looking for a reading of 54.3 on ISM’s Purchasing Managers Index (PMI), we instead received a measure of 50.9. It was a disturbing decline from June’s healthier mark of 55.3. Keeping in mind that 50.0 marks the break between expansion and contraction, the news rang a loud alarm from Silicon Valley to Detroit to Wall Street.

President Obama has publicly hung his great hope for American economic growth partly on a manufacturing revival. Much of our shared vision is based on manufacturers’ sales into the hot emerging markets of India and China. Yet recent months’ data has only offered a decelerating rate of expansion that is now near stalling. In fact, that seemed to be the broad-bearing message throughout the report. While there was little change in the number of respondents reporting better conditions generally speaking, there were also few reporting worse conditions. However, there was a marked increase in the number of respondents reporting similar conditions to June. What’s important is that there clearly seems to be a slowing in the manufacturing sector that could lead to a downturn in the months ahead.

For many industries, the summer months produce a seasonal lull, and this is especially the case for those doing business with Europe. Respondents qualitative responses seemed to show European weakness and U.S. softness, but growth in demand from Asia continued. In fact, the President’s hopes seemed somewhat supported, as the weakness that took the index lower was mostly due to lighter domestic demand.

We can be certain that the uncertainty caused by Washington DC’s fumbling of the debt ceiling legislation, nearly pushing the nation into default (an issue not yet resolved as I publish), froze business activity within the U.S. in July. Indeed, the New Orders Index slipped short of 50.0, to 49.2, from 51.6 in June. This could play an important role in taking the broader PMI measure under 50 in August. Also, hiring understandably shut down, with the Employment Index falling to 53.5, from 59.9 in June. Neither of these data points offer prospect for third quarter economic expansion, just days after Q1 GDP growth was revised sharply lower, to +0.4% from 1.9%, and Q2 growth was reported only up 1.3% against economist expectations for 1.9%.

The data might have been more poorly received Monday if not for the sigh of relief taken by global markets, thanks to what appears to be an imminent resolution to the U.S. debt uncertainty. However, investors should not overlook the fact that the pace of manufacturing expansion had been decelerating over recent months, even before the clouds of uncertainty gathered over Washington. Unfortunately for many American factory line workers, growth in overseas demand for U.S. goods might not necessarily result in a proportional increase in U.S. based jobs. With the cost of transportation high, tax rates often less favorable, and a hungry workforce at the destination of demand, that overseas growth might just employ more foreigners in the end.

This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Manufacturing – What’s Up with That?!

The mayhem that is manifesting in the manufacturing sector brings that familiar Saturday Night Live (SNL) skit to mind, What’s Up with That?! Between this week’s reported ISM data and Factory Orders, it’s no longer a forecast to say that manufacturing is missing something, unlike the skit. And given that China, India and the United Kingdom all reported less expansion in their manufacturing bases this week as well, I must say, what’s up with that?!

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative Tickers: NYSE: BA, NYSE: RTN, NYSE: DGI, NYSE: GY, NYSE: GD, NYSE: GR, NYSE: NOC, NYSE: HON, NYSE: LMT, NYSE: COL, NYSE: LLL, NYSE: ERJ, Nasdaq: FLIR, Nasdaq: BEAV, NYSE: TDG, NYSE: SPR, NYSE: CAE, NYSE: ATK, NYSE: HXL, NYSE: TGI, NYSE: ESL, NYSE: MOG-A, NYSE: HEI, NYSE: TDY, NYSE: CW, Nasdaq: CVCO, NYSE: SKY, Nasdaq: NOBH, Nasdaq: PHHM, NYSE: MHK, Nasdaq: IFSIA, NYSE: AIN, NYSE: UFI, NYSE: ITW, NYSE: TYC, NYSE: CMI, NYSE: KUB, NYSE: IR, NYSE: DOV, NYSE: ITT, NYSE: FLS, NYSE: PLL, NYSE: DRC, NYSE: SPW, NYSE: GDI, NYSE: IEX, Nasdaq: NDSN, NYSE: GGG, NYSE: ATU, Nasdaq: MIDD, NYSE: ABB, NYSE: ETN, NYSE: NJ, NYSE: ROK, NYSE: AME, NYSE: RBC, NYSE: TMB, Nasdaq: WGOV, NYSE: CAT, NYSE: DE, NYSE: CNH, Nasdaq: JOYG, Nasdaq: BUCY, Nasdaq: AGCO, NYSE: EMR, NYSE: PH, NYSE: ROP, NYSE: PNR, NYSE: WM, NYSE: RSG, Nasdaq: FAST, NYSE: VMC, NYSE: MDU, NYSE: MLM, NYSE: OC, NYSE: VAL, NYSE: PCP, NYSE: X, NYSE: RS, NYSE: NVR, NYSE: DHI, NYSE: PHM, NYSE: TOL, NYSE: HOV, NYSE: CRH, NYSE: CX, NYSE: EXP, NYSE: FLR, NYSE: MDR, Nasdaq: FWLT, NYSE: ICA, NYSE: SWK, NYSE: TKR, NYSE: KMT, NYSE: LUK, NYSE: MAS, NYSE: WY, NYSE: PWR, NYSE: CBI, NYSE: EME, NYSE: SNA, NYSE: TTC, NYSE: GM, NYSE: F.

Manufacturing – What’s Up with That?!

Some would have you believe that in actuality, the Factory Orders Report for April was not quite as bad as it appears. They’ll tell you that the 1.2% decrease in orders was helped along its downward way by a revision in March’s growth to 3.8%, from the initially reported 3.0% increase. But what matters is that April factory orders were less than March, period. Sure orders were 11.8% above April of 2010; the market pays closer attention to month-over-month change though. If she were a selfish woman, she would say, “What have you done for me lately.” And anyhow, other data points support the argument that the U.S. manufacturing sector is faltering.

Motor Vehicle Sales fell in May, missing analysts’ estimates, likely on higher gasoline pricing and a straggled consumer. The annualized rate of domestic motor vehicle sales dropped to 8.8 million, well short of the 9.7 million pace expected by the economists surveyed by Bloomberg. May was also deeply lower than April’s sales rate of 10.1 million. GM’s (NYSE: GM) deliveries dropped 1.2%; Ford’s (NYSE: F) deliveries fell 2.6%; and Toyota (NYSE: TM) and Honda Motors (NYSE: HMC) sales fell as well, though it dealt with special issues. According to IHS Automotive, 3 to 3.5 million in annualized sales may be lost or deferred to next year because of the catastrophe in Japan.

Clearly, Japan is having some impact on the global economy, which should be expected given the importance of its economy on the global scale. Japan is deeply integrated into the global economy, and its missing automotive part and car deliveries and electronics will reach broadly. But the depth of damage to the U.S. market seems to say there’s more to the manufacturing miss than Japan.

The most compelling argument was made by the Institute for Supply Management Wednesday, when it reported that its ISM Manufacturing Purchasing Managers Index (PMI) dropped precipitously to 53.5 percent, from 60.4 percent in April. That 6.9 point fall-off was hard to overlook, as it was also dangerously close to the 50 threshold that separates segment expansion from contraction. The May reading was the lowest in 12 months. Several of the qualitative responses of purchasing managers named inflation outright as a concern, and one manager in the machinery segment said they were more aware now of a potential softening in industry.

The 10.7 percentage point drop in the New Orders Index would seem to say the writing is on the wall. New Orders marked just one point above 50. Production dropped 9.8 percentage points, so the only real strength, if you can call it that, came from peripherals, including customer’s inventories. Yet every single component index reported slower expansion than in April. I suppose the only real good noise was that the pricing index fell 9 points, though at a mark of 76.5, it still measured significantly swift growth. Order backlogs, however, dropped 10.5 points, to 50.5. What’s up with that?!

The most obvious culprit is softened end demand for manufactured goods. Behind this would clearly be expensive gasoline prices, and the higher prices of all goods. Commodity price pressure has been effectively moving through the producer plateau on to the consumer level. We’ve seen it in consumer staple companies and retailers, raising prices due to higher petro-chemical component prices and even cotton prices. It’s being found across the board, with the Core Consumer Price Index making 0.2% month-over-month gains of late. This is the continuation of the trend that was becoming preeminent before the financial crisis staggered it.

It reminds me of an old argument I was making when I first started blogging, that there was a difference today versus years past with regard to food and fuel price change. I said there was a secular driver behind the current trend for higher fuel prices, the emergence of the developing world. This was no seasonal or production driven hike in food and petroleum. Rather, demand was ratcheting up for all goods and services. The monster we created in China was now alive and out of control, and it would destroy everything our civilization had come to rely on… especially price stability. Oh we thought she would solve all our profit margin problems when we moved our manufacturing base to China. What say you now American COOs?

Eventually the cost of living would price more and more of us out of consumption. The consumer mood of late certainly does not depict a happy shopper. So when people stop purchasing goods and services, none of us should be surprised to find recession again at the doorstep. The economy was vulnerable still to begin with, and then you go and let gasoline spike to $4? The government is debating the debt ceiling and Standard & Poor’s is threatening a relatively near-term downgrade of America. Wouldn’t you expect uncertainty to creep its way back into the minds of investors, confusing them as to what to do next, if not to take their money and run?

I’ll tell you what to do next. First of all, win the war in Libya as quickly and cleanly as possible. Take out the madman, and send your best political consultants over to help the Libyans draft a constitution and elect a government of some sort. Protect the oil and get oil and gasoline prices back down one way or another! Next, Congress needs to set a deadline for a debt deal that nowhere near flirts with the real deadline of the debt ceiling. They need to lock themselves up in a room and realize that this is not like every other political pressure cooker; the heat is much hotter, and we’ll all get burned if they push the political game too far this time around. That’ll do for starters, and oh yeah, that’s what’s up with that!



This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Industrial Production Lull Shakes Stocks

Economic Analysis

The Federal Reserve published Industrial Production data for the month of April this morning which added to economic concerns and helped weigh down the market. The Dow Jones Industrials Average (NYSE: DIA) dropped a half of a percentage point on this and other negative news Tuesday.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative Tickers include: NYSE: BA, NYSE: RTN, NYSE: DGI, NYSE: GY, NYSE: GD, NYSE: GR, NYSE: NOC, NYSE: HON, NYSE: LMT, NYSE: COL, NYSE: LLL, NYSE: ERJ, Nasdaq: FLIR, Nasdaq: BEAV, NYSE: TDG, NYSE: SPR, NYSE: CAE, NYSE: ATK, NYSE: HXL, NYSE: TGI, NYSE: ESL, NYSE: MOG-A, NYSE: HEI, NYSE: TDY, NYSE: CW, Nasdaq: CVCO, NYSE: SKY, Nasdaq: NOBH, Nasdaq: PHHM, NYSE: MHK, Nasdaq: IFSIA, NYSE: AIN, NYSE: UFI, NYSE: ITW, NYSE: TYC, NYSE: CMI, NYSE: KUB, NYSE: IR, NYSE: DOV, NYSE: ITT, NYSE: FLS, NYSE: PLL, NYSE: DRC, NYSE: SPW, NYSE: GDI, NYSE: IEX, Nasdaq: NDSN, NYSE: GGG, NYSE: ATU, Nasdaq: MIDD, NYSE: ABB, NYSE: ETN, NYSE: NJ, NYSE: ROK, NYSE: AME, NYSE: RBC, NYSE: TMB, Nasdaq: WGOV, NYSE: CAT, NYSE: DE, NYSE: CNH, Nasdaq: JOYG, Nasdaq: BUCY, Nasdaq: AGCO, NYSE: EMR, NYSE: PH, NYSE: ROP, NYSE: PNR, NYSE: WM, NYSE: RSG, Nasdaq: FAST, NYSE: VMC, NYSE: MDU, NYSE: MLM, NYSE: OC, NYSE: VAL, NYSE: PCP, NYSE: X, NYSE: RS, NYSE: NVR, NYSE: DHI, NYSE: PHM, NYSE: TOL, NYSE: HOV, NYSE: CRH, NYSE: CX, NYSE: EXP, NYSE: FLR, NYSE: MDR, Nasdaq: FWLT, NYSE: ICA, NYSE: SWK, NYSE: TKR, NYSE: KMT, NYSE: LUK, NYSE: MAS, NYSE: WY, NYSE: PWR, NYSE: CBI, NYSE: EME, NYSE: SNA, NYSE: TTC, NYSE: GM, NYSE: F and NYSE: TM.

Industrial Production Lull Shakes Stocks

Industrial Production was unchanged in April, a result that fell short of economists’ consensus expectations for 0.4% expansion, based on Bloomberg’s survey. Meanwhile, March production was revised down to +0.7% from 0.8%, and February’s activity was revised to record a decrease in production of 0.3%, versus the previously seen increase of 0.1%.

The earthquake in Japan weighed on industrial production, as automobile assembly activity was impeded by related supply shortages. Total motor vehicle assemblies dropped from an annual rate of 9.0 million units in March to 7.9 million units in April. Still, this does not explain the unfavorable changes to February and March. We know from our tap on the economy that extreme weather cost February some, and that March’s growth was likely affected by balancing or normalization. It’s funny that we are being vindicated now by late revisions to February economic data, as we had warned the economy would soften.

The case for a slowing industrial sector, and especially the manufacturing base, is supported by recent regional data, to a degree. The Empire State Manufacturing Survey was reported Monday by the New York Fed. The index fell to a mark of 11.88 in May, down from April’s 21.7 reading. While any figure above zero indicates growth, it’s still important that the pace of expansion was weakened.

Within April’s Industrial Production Report, we saw Capacity Utilization deteriorate to 76.9%, from 77% in March. Capacity Utilization has yet to fully recover, as it remains 3.5% below its long-term average (1972 to 2010). Clearly, with progress in inventory management and operations efficiencies gained over the years, capacity is more significantly short of more recent times’ usage. The report notes utilization highs of around 85% in the mid-90s and 80s. That said, utilization is significantly up from the 2008-2009 low of 67.3%. We suppose the capacity being measured only includes those plants that have not been shut down, which would mean the nation’s capacity utilization is overstated.

Manufacturing, a subset of the overall industrial measure, marked a 0.4% decrease in production in April. Manufacturing Capacity Utilization also dropped four-tenths of a point, to 74.4%, still 4.6% below its long-term average, but 10% above its 2009 trough.

Highlighting the main culprit behind the month’s drop-off, the output of motor vehicles and parts fell by 8.9% in April. That said, the report also noted “significant” losses in output in the following industries: primary metals; electrical equipment, appliances and components; and furniture and related products. We should note that weakness was not universal, with expanded production in: nonmetallic mineral products, fabricated metal products, machinery, computer and electronic products, and aerospace and miscellaneous transportation equipment. Durable goods production overall fell by 1.0%, while nondurables expanded by 0.1%.

Interpretation of manufacturing data now must account for the effects of the earthquake in Japan. Yet, other data across other segments of the economy seem to also show softness or are threatening softness. A slowing of economic growth has been clearly evident, and the Federal Reserve has acknowledged it as well. Certainly, the price of gasoline and other commodities has weighed on consumer sentiment and spending. Emerging nations, China and India, have put the reins to growth via constraints to their respective banking systems. Thus, an American manufacturing sector that had been surviving through domestic softness via the lift of the developing world is now facing even tougher times at home and in Europe combined with less support from Asian demand.



This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM), Toyota (NYSE: TM) and Ford (NYSE: F).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Factory Orders Fumble in February

Factory Orders fell 0.1% in February, but all is not lost. While there's an inclination to fear the worst, given the latest turn in several forward looking economic indicators, our review of the latest manufacturing data does not have us up in arms, at least not immediately. However, don't get me wrong, the report does sound an alarm about the economy.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative Tickers: NYSE: BA, NYSE: RTN, NYSE: DGI, NYSE: GY, NYSE: GD, NYSE: GR, NYSE: NOC, NYSE: HON, NYSE: LMT, NYSE: COL, NYSE: LLL, NYSE: ERJ, Nasdaq: FLIR, Nasdaq: BEAV, NYSE: TDG, NYSE: SPR, NYSE: CAE, NYSE: ATK, NYSE: HXL, NYSE: TGI, NYSE: ESL, NYSE: MOG-A, NYSE: HEI, NYSE: TDY, NYSE: CW, Nasdaq: CVCO, NYSE: SKY, Nasdaq: NOBH, Nasdaq: PHHM, NYSE: MHK, Nasdaq: IFSIA, NYSE: AIN, NYSE: UFI, NYSE: ITW, NYSE: TYC, NYSE: CMI, NYSE: KUB, NYSE: IR, NYSE: DOV, NYSE: ITT, NYSE: FLS, NYSE: PLL, NYSE: DRC, NYSE: SPW, NYSE: GDI, NYSE: IEX, Nasdaq: NDSN, NYSE: GGG, NYSE: ATU, Nasdaq: MIDD, NYSE: ABB, NYSE: ETN, NYSE: NJ, NYSE: ROK, NYSE: AME, NYSE: RBC, NYSE: TMB, Nasdaq: WGOV, NYSE: CAT, NYSE: DE, NYSE: CNH, Nasdaq: JOYG, Nasdaq: BUCY, Nasdaq: AGCO, NYSE: EMR, NYSE: PH, NYSE: ROP, NYSE: PNR, NYSE: WM, NYSE: RSG, Nasdaq: FAST, NYSE: VMC, NYSE: MDU, NYSE: MLM, NYSE: OC, NYSE: VAL, NYSE: PCP, NYSE: X, NYSE: RS, NYSE: NVR, NYSE: DHI, NYSE: PHM, NYSE: TOL, NYSE: HOV, NYSE: CRH, NYSE: CX, NYSE: EXP, NYSE: FLR, NYSE: MDR, Nasdaq: FWLT, NYSE: ICA, NYSE: SWK, NYSE: TKR, NYSE: KMT, NYSE: LUK, NYSE: MAS, NYSE: WY, NYSE: PWR, NYSE: CBI, NYSE: EME, NYSE: SNA, NYSE: TTC, NYSE: GM, NYSE: F.

Factory Orders Fumble in February

Factory Orders fell 0.1% in February, yes, but all is not lost dear friends. As we reviewed the economic report, which required plenty of coffee in this particular case, we found appeasing factors that quelled our concern a bit. With opening day baseball playing in the background, we reviewed the relatively bland economic statistics, so forgive me if I accidentally calculate an OBA in place of an inventory ratio.

What we found is that an upward revision to January's factory orders played against February's percentage change. January orders were revised higher, to 3.3%, from the 3.1% rate initially reported. Economists surveyed by Bloomberg were looking for a 0.5% increase for this reported month, so at least some of the difference between expectations (+0.5%) and the result (-0.1%) is explainable by the prior month revision. Furthermore, we would have likely had a positive change in February, instead of a negative change, if the revision did not occur.

Also quelling our concern is the fact that January orders were so strong, so that perhaps some of what might have been ordered in early February was instead called in at the end of January. This is the reason many economic data points review several months combined, and why some companies no longer offer monthly data. With that said, perhaps we should not have expected much from February, given January’s strength.

If we exclude the big-ticket transportation sector from the order data, we find new orders actually increased by 0.1%. The transportation sector posted a big new order decrease of 1.5% in February. Transportation has been down four out of the last five months. Durable goods orders, also down 4 out of 5 months, fell 0.6% after a 3.7% increase in January. Nondurables increased by 0.3%.

Shipments increased for the sixth consecutive month, growing by 0.3% in February. That's good news. Unfilled orders rose by 0.5%, but before you get antsy, realize that this data-point will increase when economic activity is on the rise. What should be concerning is that the Unfilled Orders–to–Shipments Ratio was up to 5.64, from 5.63. When the increase is not proportional, taking into account how proportions might change as the level of activity changes, that's when we raise an eyebrow (literally in The Greek's case). Inventories increased by 0.8%, but again, we need to look at inventory in proportion to sales activity. The Inventory-to-Shipments Ratio did rise though, to 1.26 from 1.25.

Taking a closer look at the industries measured by the report, we find interesting strength in several areas. Industrial Machinery Shipments, for one, posted very impressive growth, rising 16% in February. However, closer inspection shows a significant drop in January shipments that was basically made up for in February. The same thing happened in Farm Machinery, which was up 12.7% in February. This might be part of the reason Deere (NYSE: DE) was up 2.6% today.

Aluminum and Nonferrous Metals data seems to show an interesting growth trend, with shipments up 4.4% in February, following 2.6% and 3.8% increases in the prior two months. But how much of that do you think is due to price increase? I would say it's probably a significant reason for the growth here. Hey, that shouldn’t matter for Alcoa (NYSE: AA) though, when it reports results shortly, but it matters for the economy as it distorts the view of real growth. Alcoa's shares have been moving up heading towards its EPS report. We also saw Nondurable Farm Products post shipments increases, again likely on price change.

With regard to autos, shipments increased 1.6% in February, 0.2% in January and 0.1% in December. Shipments of Light Trucks and Utility Vehicles have also gained, rising 5.4%, 5.7% and 6.3% over the last three months. The report does not provide new order activity for these segments though. Noise will clutter automobile statistics in the months ahead though, due to the logistics nightmare tied to the disruption of production in Japanese plants.

As far as orders go, when excluding transportation, there is a noticeable decelerating trend over the last three months. The trend shows orders rose only 0.1% in February, down from 0.7% growth in January, which was down from 3.0% growth in December. That is concerning, and might be more than just a lull.

Aluminum orders gained 4.2% in February, with gains also posted in the two months prior. Mining, Oil Field and Gas Field Machinery Orders were up each of the last two months, rising 22.4% in February. Given the intensification of focus on energy independence, this is more good news for these machinery makers. Computers and Electronic Products Orders have hit a dry spell, sort of meandering around limbo, with orders up just 0.1% in February.

In conclusion, I would not be too worried about the month's decrease in order activity in February, due to its following such a strong January. However, the steadily slowing pace of order activity excluding transportation over the last three months might be a warning sign that the manufacturing strength that optimists keep pointing to might be pulled out from under them.

This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.