Floyd Norris week continues here at the Big Picture. Today’s offering is a global review of surging new orders for businesses.

In economic recoveries, Manufacturing tends to lead service businesses. But according to the data Norris points to, even service providers are now reporting increases in new business. After 14 consecutive months of declining orders — the longest stretch since the early 1980s — US manufacturers negative streak ended last May. Since then, ISM has been positive all but one month.

Orders for Service companies finally began turning up in September 09. As Norris notes, “But by March, a higher proportion of companies were reporting gains than at any time since 2005.

The charts below reveal this is not limited to the US, but is a global phenomenon:

click for larger graphic

Graphic courtesy of NYT


In Order Books, Signs of Broad Growth
NYT, April 9, 2010   

Category: Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

22 Responses to “Accelerating Orders Around the Globe”

  1. ZedLoch says:

    It might be interesting to compare data points such as these with those from the early 1930′s. We’ve all seen the graphs of GDP/DJIA with the attached quotes of “Things have turned the corner. The worst is certainly over” followed by another huge drop and The Great Depression.

    So if we compare some of the underlying data points now to those available back then, perhaps we could avoid the trap of being overly optimistic, or find some ways in which it is justified.

  2. dagmountain says:

    The rich are back back baby! According to Bank of America the richest one percent account for fifty three percent of the seventy percent consumer/GDP number in the US. Can we be honest about who is driving these retail sales? It’s the plutonomists and main street is not just dealing with a new normal but a perma-normal.


    BR: The top 1% are more than half of consumer spending? That sure sounds high — please send me a link or that research report

  3. Mike in Nola says:

    Barry, you better watch out. Kneale may give you a big, wet kiss when he sees you :)


    BR: Only until the next time I flip bearish — then I am Judas once again . . .

  4. HEHEHE says:

    Seems to me to be nothing more than the end of the inventory re-build. Also many companies are likely deciding to put some of the cash on balance sheets to work on something other than dividend increases and stock buybacks (both of which are complete gimmicks that can be cancelled/suspended as soon as the economy turns). You take a year or so off from capital improvements you need to go forward with some of them at some point.

    I’d be more confident in it being more than an anomaly if the BDI was rising and not falling:


    When you have every country in the world engaging in monetary and fiscal expansion at some point orders will increase from the artificial demand. MORE IMPORTANTLY ask yourself if this is not already priced into the stock market?

    I think at this point the bear camp’s view is that after the wave of artificial demand we fall back into recession. The bulls think we are headed for a full on recovery. I don’t see how a recovery is possible without a fully participating US consumer. You look at the most recent consumer credit report and sales tax reciepts and it would suggest the bears have it right at this point.

    I assume this is more Floyd having to submit his article quota for the week than anything else;)

  5. DD123 says:

    Perspective: Use it or lose it.

    Here’s a snippet, directly from ISM in Feb. 2007:


    • “Cautious optimism for continued growth albeit at a slower pace than 2006.” (Finance & Insurance)
    • “There seems to be a settling taking place with prices and vendor performance.” (Retail Trade)
    • “Encouraged by economic indicators.” (Educational Services)

    Here’s additional commentary on the ISM Manufacturing report from April 30, 2007:

    “The ISM Manufacturing Index was 54.7, the strongest report in a year. … The ISM says that this year’s readings, taken together, suggest economic growth of 3.1% and the April number, if annualized, would represent a 4% rate of growth. Tony Crescenzi, the Chief Bond Strategist at Miller, Tabak, and Co., does a great job covering economic releases in his column for RealMoney. He calls the ISM report the “real deal” with “no quirks.”

    Let’s move closer to the cliff and see what the experts were saying in September of 2007. Here’s a clip from Bloomberg on that month’s report:

    “The figures eased concern among Federal Reserve policy makers, who last month said downside risks to growth were mounting. `At least the manufacturing sector looked pretty robust in August,” said Julia Coronado, a senior economist at Barclays Capital Inc. in New York, who forecast the index would drop to 53. “The sector looks pretty healthy overall, basically holding steady. The details actually look fairly reassuring.”

    Here’s my personal favorite, though, on that very same report:

    “Manufacturers are less concerned about the turmoil in financial markets, said Norbert Ore, chairman of ISM’s factory survey during a press conference. ‘In Great Shape’ “Our members aren’t mentioning, in terms of comments, a lot of concerns about the overall financial-market picture,” Ore said. If one didn’t know there had been a crisis, the report would suggest “the economy is in great shape. We are not seeing signs yet that the economy is deteriorating significantly.”

    Get your fractals on…just like Floyd. You too, can see robust ISMs, glowing employment reports…and don’t forget: The coastline of Britain really is infinite.

    It’s kind of sad, though. “Getting your Floyd on” used to represent a good old fashion reality-bending, stoner trip with Waters and Gilmour to the The Dark Side of the Moon… Now it just represents Norris, the NYT and a cup of decaf.

    Dan Duncan

  6. What does a random month a year before the Bear Stearns collapse demonstrate?

    Give me a moving picture and a two years of trend data — like Norris did — over the snapshot of a single month. Any given month — whether its current or 3 years old lacks context. And context, to answer Dan’s query, is what helps you develop some perspective.

    A single month snapshot — from Feb 2007? Fail.

  7. cognos says:

    AND… those ISM reports from 2007 were AFTER 4 years of expansion and 2-3 years of Fed hikes to into the 4-5% range.

    Doesnt seem relevant to 12-months after a serious trough when ISM is +20 over that prior year and +4 on the last month.

    ALWAYS think — business cycle!

  8. insaneclownposse says:

    This post is all well and fine, but I’m pretty sure the good news has been discounted after a 70% rally. Does anyone really doubt there is a global recovery at this point? Asia is absolutely on fire. The RBA has hiked multiple times in the last six months.
    The problem with the recovery is that not much is happening in the U.S. and Europe despite all of the stimulus thrown at the recession. There is certainly a level of economic activity that is vastly improved over last year, but we are a long ways away from a rosy scenario.
    I’m pretty sure that historically, the average banking system implosion causes economic difficulties for about five years. It’s been 18 months since the global financial system collapsed and we are supposed to believe that we are all going to ride off into the sunset like nothing ever happened? I guess this time really is different then.

    I think now is very much the time to become skeptical of the current rally in U.S. equities.

  9. ICP:

    The 70% move wasn’t in a vaccum — you need to understand the context of the rally.

    It has been a 4,500 point, thirteen month rally — that came AFTER a 5,000 point, 6 month collapse.

  10. chomen says:

    How does the Kool Aid taste, Barry?

  11. tradeking13 says:

    BR, what are your thoughts on Goldman’s recent note on the manufacturing rebound losing steam in the near future?


  12. wunsacon says:

    >> bear camp’s view is that after the wave of artificial demand we fall back into recession. The bulls think we are headed for a full on recovery.

    I don’t disagree with Barry’s view that nominal valuations *can* go higher. *1 But, it really is all about how much the government keeps stimulating the economy. If they stop, I would expect the insolvency crisis to once again become an acute liquidity crisis.

    Why do I believe that? In the last 30 years, consumers spent their income, then their savings, and then their borrowed money. The “reserves” that powered the last few recoveries is tapped out. After spending even our borrowed money, what money do we spend next? The money from entitlement/welfare programs?

    *1 That *is* all you’re saying, Barry. Isn’t it? Or are you saying average blokes are going to see a better “real” economy, with hiring and all?

  13. hgordon says:

    Where did I read yesterday that the Republicans don’t like the recovery story because it makes the Democrats look good and the Democrats don’t like the recovery story because it kills their chances to push through another stimulus bill ? Bizarre. Wall Street and Washington largely are irrelevant to most small businesses (except when they really screw things up), which are just cranking along trying to get stuff done. I don’t know what is or isn’t a real economy, but outside of the housing sector which will stay tweaked for years, it seems that folks have adapted to whatever represents the new normal, and they are moving forward with a “business as usual” attitude.


    BR: Here on Friday Morn:

    He also points out to an unusual political factor: Both Republicans and Democrats are rooting for bad news. Republicans loath to give President Obama credit for anything, and Democrats want another stimulus bill passed. Hence, a recovery defeats what the parties seem to favor as an economic means to a political end.

  14. rootless_cosmopolitan says:

    So my question is how forward looking are those indices, which represent the supply side of the economy? What do they say about the economy a half or a year from today? Does it say more than that the unprecedented stimulus money pumped into the economy by governments all over the world has finally shown up also in the supply side data?

    It was Barry himself who brought this to attention here a couple of weeks ago or so:


    According to these metrics, the demand side of the US-economy has already been contracting for more than two months again, which indicates that the supply side will eventually follow this year and the GDP change will drop to around Zero or to negative values. This trend is being corroborated by recent housing data (e.g., new home sales). If these indices prove to be of any value and they have predictive power indeed, the great recovery, which is touted by the bulls so much (You know who you are), and the stellar earnings growth, which supposedly will bring back earnings to levels of the credit bubble years right before the GFC as quickly as if nothing has happened, will be exposed as wishful thinking, and the next recession may be upon us as soon as this year, or early next year.


  15. A slowdown post govt stim is a real risk.

    Currently, the actual data is positive; forecasts/analyst opinions are something else . . .

  16. insaneclownposse says:

    Dunno….. the indices had a sharp break there in January despite solid data and good earnings. Also, if you are going to bring up context of the rally, I think you have to consider the overall secular bear market backdrop as well.

    Recent market action is what I’d expect at a change of trend. Market is pinned at “overbought” (i hate that term btw) readings on fairly light volume in what seems to be a nasty short squeeze.
    I think the question is how much higher we can go on short covering alone? Because I’m pretty sure retail is not going to come in to push prices up at this point.
    When I turn on bubblevision, all I hear is bullish blather and no bears. This seems to be the mirror opposite of last March when there wasn’t a single bull on T.V. It never pays to be a contrarian just for the sake of being contrarian, but when I put it all together, I just don’t know about the rally continuing much longer from here.

  17. mathman says:

    Enjoy your manufactured wealth while you can, since it won’t last and all this fiat money will eventually become worthless. In fact, not correcting any of the problems that led to this precarious situation and advancing this “make-believe” wealth-gathering agenda only assures that the downfall will happen more rapidly that it would if the recession slowly and deliberately worked its corrective measures.

    Humanity, hard-wired to react to things “as they are” and never much on the long view or consequential reasoning, is doomed to a hard down-sizing as a result.

  18. SOP says:

    So the Patient (world economy) shows a response to the adrenaline we stabbed into it’s heart the past 2 years.

    Wonderful. The emergency room nurses flutter with glee when the patient’s eye’s flutter open…

    Meanwhile, the emergency room doctors are calling their malpractice insurance and texting their lawyers…

    The doctors know the second we take the patient off life support (i.e. back to normal accounting principles, functional SEC etc,), the patient will relapse into coma and eventually “death.”

    Party On Garth

  19. SOP says:

    P.S. 1. How much of this is debt-based?

    2. will it ever be paid back or is this more “inventory” to be written off later?

    3. How much of this is actually productive and useful vs. “busy work” to keep idle hands busy (e.g. Krugman’s “bury gold and pay someone to dig it up again” nonsense) ?

    We can fool ourselves, but we can’t fool Mother Nature. Her capitalism is the only real capititalism.

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