No Big Help from Factory Orders and ISM Non-Manufacturing

Factory orders for the month of April have now been released from the Commerce Department. They were up 1.0%, short of the 1.4% expected by Bloomberg and short of the 1.5% expected by Dow Jones. Aircraft orders are given the credit for the boost, and it appears as though the overall factory levels got a weak start off to the second quarter. Our one issue of note here is that this is an April number, and we already have seen much more recent data.

The total factory order gain was $4.9 billion to about $474 billion. Outside of aircraft orders, the reading would have been -0.1%. Bad news was shown in computers, with orders there down more than 9%. Today's data is actually a month earlier than the unexpected drop in manufacturing that was reported from the Institute for Supply Management (ISM).

A separate report was issued today from ISM covering the non-manufacturing sector of the economy. That figure came in at 53.7%, versus a Bloomberg consensus of 53.8%. This was a May reading, rather than the April reading from the Commerce Department disucssed above.

Stocks remain weak but have recovered from the lows of the day after the open. The S&P 500 Index is now down only about 3.50 and the DJIA is now down only about 30 points.

We are in a period where bad news, or moderately bad news, actually may be good news for the stock and bond market. If things are still muddling along and slightly weaker than better, then the Federal Reserve likely will have to keep the foot on the pedal and maintain its bond-buying activities under the quantitative easing measures.

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