Red Flag or Bloated Order Correction?

摘要

U.S. Electronic equipment orders have been booming since July 2003. However the November data (released in early January) contained a sobering surprise. Communications equipment orders (combination of data-corn and telecom) plunged 40% from the prior month driving total equipment orders sharply down (Chart 1). Is this plunge a red flag, an artifact or more likely a one-month correction for bloated September and October orders? The equipment data I report is from the Department of Census Durable Goods and Factory orders reports. Both "unadjusted and "seasonally adjusted" data are available. I normally use the adjusted data as it "smoothes" the purely seasonal peaks and valleys. Chart 2 compares both the adjusted and unadjusted values for the same data series as Chart 1. Notice that the unadjusted series has strong peaks in March, June, September and December. This is because many companies use a 4/4/5 week accounting system effectively reporting an extra week's data in the last month of each quarter. IPC's statistical program and SIA also report "unadjusted" numbers. Per Chart 2 November equipment orders definitely plunged (much more than the prior Novembers), indicated by black circles. Judging from the order patterns it appears that October was excessively strong and there was a downward correction in November. Since virtually all the industry indicators are positive I am expecting a rebound in December and January. We'll see!