Skip to comments.US Dollar Falls After August Factory Orders Slumps By Most Since 2009
Posted on 10/04/2012 12:39:49 PM PDT by SeekAndFind
THE TAKEAWAY: U.S. factory orders plummets in August by most since January 2009 > Demand likely to remain weak amid global slowdown and weak business spending > USDJPY bearish
New orders to U.S. factories plunged in August by the most since January 2009, as a sharp slump in transportation weighed on manufacturing activity. According to the U.S. Department of Commerce, orders for factory goods declined 5.2 percent in August, following a revised gain of 2.6 percent the previous month that was lower than the 2.8 percent growth initially reported. The consensus forecast of 66 economists surveyed by Bloomberg News had projected a 5.9 percent decline in bookings for manufactured goods. Excluding transportation, factory orders rose 0.7 percent, suggesting modest expansion in broader-based manufacturing activity.
Orders for durable goods tumbled 13.2 percent after posting three consecutive monthly increases, while non-durables, which include goods such as petroleum and chemicals, climbed 2.2 percent. Transportation equipment had the largest decrease, plummeting 34.9 percent.
The cooling in manufacturing reflects a slowdown in business investment and exports, as concerns about the impending fiscal U.S. fiscal policy changes of higher taxes and government spending cuts, and ongoing worries about the European debt crisis and slowing global growth provide a weak environment for business spending.
USDJPY 1-minute Chart: October 4, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
In the initial minutes after release of the factory order data, the greenback tumbled against the Japanese yen. At the time this report was written, the USDJPY pair continued to trade lower at 78.52 yen.
--- Written by Tzu-Wen Chen, DailyFX Research
That’s how the economy really works in the long run. A country that decreases manufacturing will have a decreasing currency. One country must have real and useful goods to trade for such useful things from another country. Currencies will balance in this situation.
Have fun. Enjoy the slide.
“Have fun. Enjoy the slide.”
My Industrial Supplies business will be a hobby if this asshole gets re-elected.
I have some hobbies, although they’re not businesses, yet (zoning, other anti-domestic-competition regulations). Wouldn’t mind getting deserved, real private sector revenues for parts made in Asia and elsewhere for now.
The ongoing default process is a result of over 30 years of man-hating, family-hating and collaborations by our business and political leaders with foreign communist enemies (now fascist enemies) to destroy the USA and several other western nations. This is a morally bankrupt and socialist nation for now. It won’t be, after the inevitable debt repudiations and currency adjustments ahead.
There is no big government for long, where revenues from debt continue to become properly worthless. Given socialist (fascist) politicians’ determination to continue paying big incomes to the government-linked/government-dependent political/regulator class, the process will continue until completed.
School Pays Contractor $55/hr for Secretary to Open an Envelope
There is no necessary reason for the dollar to drop if manufacturing declines. Exchange ratios are determined, in the long run, by supply and demand of the various currencies.
Agricultural products are a huge export for the US and increases in that sector could outweigh the decrease in manufactured products.
In addition, manufacturing declines could, perversely, lead to the strengthening of the dollar because they would mean a slowing economy which reduces demand for foreign exchange strengthening the dollar.
We need to produce things in America.
In America. In America. In America.
That sounds good but the reality of the situation is that American labor is far too costly to produce many produces which can be competitively sold in a world market.
Protective tariffs would screw lower income people more severely so they aren’t the answer.
Advanced economies create new ideas and products and when the technological knowledge to produce them spreads, the production of things moves to areas of lower cost. Our economy must be geared to produce the New not protect the Old.
We agree to disagree, it appears.
You may continue to tilt at windmills if you like. But I won’t be your Sancho Panza. Sorry but I study economics hence am disqualified for that role.
Well I work.
Therein lies the difference in our opinions. :D
No our opinions differ because I have studied Economics for forty plus years and have some understanding of how a capitalist economy works.
When you protect workers in one area you also undermine workers in another area. When you distort profit flows you promote mis-allocation of our resources. This reduces overall employment and increases unemployment. We both should oppose this.
Your idea is what is wrong.
We need to bring back industry to America.
Which industries should we bring back and how much extra are you willing to pay to do so? Horse and buggy manufacture? Cheap TVs? Cheap clothes?
Involving government even more deeply is a disaster waiting to happen and decreases efficiency across the board.
The healthy capitalistic economy is characterized by constant change and government policy cannot decide what the economy should look like without enormous costs.
Some of those costs are worth paying such as protecting our defense industries but other political decisions are generally extremely harmful and lower national income.
Just saying, we need to bring back industry.
I believe Romney is also in favor of that idea.
Thus I support Romney.
It’s a novel idea, but I’m all for it. We have destroyed too much about our economy.
Industry is created by private enterprise so getting rid of The Disaster will spur that.
America is best served when the world economy is doing well. It is not a zero sum game where one part must suffer if another is doing well. And national policies have impacts all over the world. It is not a simple “us” vs “them”.
I forgot the quantifier, much, after Mexico. Here’s a corrected repeat. Mexico didn’t exchange much with other nations during the ‘60s, but more productive pairs of nations did exchange much between each other.
And a clarification...
Currency by itself has no value. Useful items have value. The important general component of trade between nations is that of useful products—not currencies. Currencies are only a tool for making trades of products—trades that will naturally, eventually balance one way or another. We owe other nations too much because of globalists’ currency con games against America.
And there’s already been talk from our business and political leadership of giving more of our natural resources to creditor/producer nations.
Cut spending, and lay the regulatory dogs off, beginning with the lowest levels of federally funded government. Get rid of the regulations against new, small domestic manufacturing, beginning with the lowest levels of government. Stop trading with nations that have high tariffs and other obstacles against US products. Stop trading with communist/fascist nations.
1) not sure what your first response is intended to say. So my comments won’t be too clear either but increased production does not mean increased prices when there are unused resources or when an industry is ramping up to maximum levels of productivity and profitablity.
2) The dollar plays a significant role in international trade and its value is increased because of this. While there are calls to replace it, the simple truth is no other entity is willing to expand its money supply to take the dollar’s place in international trade. Not with the Euro, not with the Pound, not any SDRs or gold, its the dollar or nothing.
It is also true that NO ONE knows what the proper exchange rates should be. Only the market can work all that out and it is certain that that working out will cause pain and suffering no matter what happens.
3) The Great Hamilton was the man most responsible for turning the United States from an agricultural economy to a mixed economy with strong manufacturing. For his Herculean efforts to strengthen the Union he has earned 200+ yrs of Leftist hatred beginning with Jefferson.
Unfortunately, we have only pygmies running for office compared to giants like Hamilton and Washington.
4) Much of your presumed conspiracy is actually the impersonal working out of economics. One can’t react emotionally to that and understand it. Things are made where they can be made most cheaply and always will be. Protectionist schemes always hurt the whole however beneficial they may be to one part or another. Economics is not really a handmaiden to Nationalism any more.
Currency plays several functions in the economy: a store of value, a unit of account, a standard of deferred payment and a means of exchange. When gold was money these were often in conflict.
While some power brokers, like Soros the last 40 yrs or so, can manipulate currencies marginally and made great profits for themselves doing so or arbitraging them, it is not an easy matter to peg these rates. This is why the fixed exchange rate regime was replaced by floating exchange rates fixed on a daily basis by an impersonal market.