This morning, the U.S. Department of Commerce reported that March factory orders rose 1.1% from February—more than the 0.6% expected. Good news? Not if you look back; March factory orders actually declined for the 17th consecutive month on a year-over-year basis, dropping 4.2% from a year ago.
Nothing goes straight down on a month-to-month basis. Little dead cat bounces are always a possibility. That’s why it’s important to look back a year and see what the trend is telling you, because as an investor, the trend is your friend. In 60 years, the U.S. economy has never suffered a 17 month continuous year-over-year drop in factory orders without being in a recession. Here is the year-over-year chart of orders. Most ski hills don’t slope this much.
The March bounce amounted to just $5 billion in sales. March generated $458 billion in sales compared to February’s downwardly revised $453 billion. February’s sales were the lowest in the past five years so this bounce is truly of the dead cat variety. You can see the March dollar gain at the end of the following graph…reading glasses advised.