Bad News for Economic Growth as Q2 2012 GDP is Revised Down to 1.25%

Q2 2012 real GDP now shows 1.25% annualized growth after revisions. The advance second quarter GDP estimate was 1.5%, whereas the second revision reported 1.7% GDP growth. The BEA rounds their final GDP numbers, so the actual GDP reported was 1.3%. When we're grabbing economic crumbs, 0.05 percentage points makes a difference.



What the Q2 GDP third estimate shows is a barely breathing economy. Businesses shed inventories, consumers spent way less, a dramatic swing from the Q2 GDP advance report and investment generally is down from the 1st quarter. Shedding inventories can be a recession indicator. Durable goods spending literally vanished in Q2, also a recession indicator. The drought showed up in Q2 GDP, negatively impacting farm inventories and potentially other GDP components indirectly.

Business Sales to Inventory Ratio Rises, Manufacturing Sales Decline -1.1% for June 2012

The Manufacturing and Trade Sales and Inventories report shows a -1.1% decrease in sales and an +0.1% increase in inventories for June 2012. Sales declined -1.1% for manufacturers, -0.8% for retailers and -1.4% for wholesalers. This is the 3rd month in a row for declining sales and this is the largest monthly percentage decrease since March 2009.


Factory Orders Decline, -0.5% for June 2012

The Manufacturers' Shipments, Inventories, and Orders report shows a -0.5% new orders decrease for June. The last three of four months in manufacturing new orders have shown declines. May revised down, from +0.7% to +0.5%. This Census statistical release is called Factory Orders by the press and covers both durable and non-durable manufacturing orders, shipments and inventories.

Manufacturing ISM PMI 54.8% for April 2012

The April 2012 ISM Manufacturing Survey increased +1.4 percentage points to 54.8% PMI, and indicates U.S. Manufacturing grew at a faster pace in April. Survey respondents are concerned about economic conditions in Europe and worry about the meager U.S. job growth. Food and Beverages report warm weather increased their sales and Computers & Electronics says sales are slowing.