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July Factory Orders Disappoint As Productivity Rises

Orders to U.S. factories rose 1.3 percent in July, the Commerce Department said moments ago, missing expectations.

Also today, the Labor Department said that second-quarter revised productivity rose at a revised rate of 6.6 percent, which means that people who still have their jobs are working harder and hours worked are still being cut.

Forecasters had expected factory orders to jump 2 to 2.5 percent. Some of the wilder estimates had it rising as much as 4.5 percent.

Still, the number represents some incremental gain. June factory orders rose .9 percent.

The factory orders tell the story of inventory held by U.S. businesses. During the worst of this recession, businesses cut off orders to factories and worked hard to burn down their inventory. (Sometimes, as with cash-for-clunkers, they got taxpayer help reducing their inventory.)

During that time, factory orders plummeted and no one was ordering anything new to sell.

But as the recession eases, and consumer confidence starts to creep back (a bit, in fits and starts), businesses need to replenish their inventories, so factory orders start to rise again.

With productivity, this is the result of an economy that's lost some 6 million jobs during this recession. Output rose in the second quarter, Labor said today, even as hours fell, meaning workers are pedaling faster. You might not think seeing your colleagues laid off left and right around you would motivate you to work more and better, but evidently that's true. (Note to H.R.: Please do not take this as an object lesson.)

-- Frank Ahrens
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By Frank Ahrens  |  September 2, 2009; 10:04 AM ET
Categories:  The Ticker  | Tags: Commerce Department, factory orders  
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Since the vast majority of those "factory goods" were produced offshore, I would be delighted and not at all surprised if a number of companies went bankrupt. People have had it with this free trade nonsense and one can only wonder when business and the political hacks they control up on Capital Hill will wake up to that fact. Obama and the Democrats road into office on a wave of people demanding that they curb or end outsourcing, end guest worker visas like they H1-B and L-1. Once in office, these fools ponied up to the corporate feed trough and forgot all about that. The result is an acceleration of outsourcing under the Democrats that even dwarfs the foolishness of the Bush years. We want TRADE TARIFFS, PUNITIVE TAXES on goods and services produced offshore, FINES, LEVIES, DUTIES. We want our jobs back and understand full well that Congress, which created this mess to begin with, can get those jobs back if they make it painful enough on companies seeking to do business in this country. (And, please, don't insult me about "trade wars". Only 5.6% of our exports are manufactured goods. The rest are raw materials. What are CHina and India going to do? Not send us more cheap guest workers, their oversupply of untrained recent college graduates? Maybe refuse to buy our wheat, oil, coal, raw timber, or other raw materials?)

Posted by: mibrooks27 | September 2, 2009 1:49 PM | Report abuse

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