Factory Orders: Declines Continued - No End in Sight

New orders at the nation's manufacturers declined 1.9 percent in January and are now down nearly 20 percent over the past year. New orders for non-defense capital goods ex-aircraft declined 5.7 percent, more than initially estimated. We expect double digit declines in real equipment & software spending will persist through 2009.

Orders & Shipments Both Indicate Continued Collapse

• Orders and shipments both declined for the sixth straight month as manufacturers continued to rapidly reduce production in the face of a global recession. Over the past three months orders have declined more than 40 percent at an annual rate, and shipments nearly as much. We do not expect any pick-up in manufacturing activity until late this year.

Inventory Liquidations Will Continue

• Inventory liquidations appear to have continued in the first quarter. Manufacturing inventories have declined more than ten percent over the last three months at an annual rate.
• Despite the rapid inventory cuts, the declines have not kept up with reductions in shipments. Further reductions in inventories may cut two percentage points off first quarter GDP growth.

Wachovia Corporation
http://www.wachovia.com

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