Business Equipment Struggles

The Lehmann Letter (SM) New Orders for Nondefense Capital Goods Excluding Aircraft is a good leading indicator for business capital expenditures because it omits the volatile aviation industry. The chart shows severe cyclical fluctuations but no growth since the 2000/2001 dot-com bust. New Orders for Nondefense Capital Goods Excluding Aircraft (Recessions shaded) On March 24 the Census Bureau reported $67.4 billion in new orders for February: The table places this figure in context. Do you see growth renewed? New Orders for Nondefense Capital Goods Excluding Aircraft in $Billions 2013 January        70.1 February       66.3 March           65.8 April              67.5 May              68.0 Continue reading

Inventory/Sales Ratio Rises to 1.40

The Lehmann Letter (SM) On March 15 the Commerce Department reported an inventory/sales ratio of 1.40: The chart is instructive. When sales fall, businesses accumulate stocks (inventories) of unsold goods. Inventories rise as sales fall, driving the inventory/sales ratio swiftly north. You can see the ratio’s recent jump. The latest number – 1.40 – is troublesome. Inventory/Sales Ratio (Recessions shaded) The table shows business sales peaked in the summer of 2014 and have fallen ever since. Inventories continued to grow and the inventory/sales ratio climbed. Month & Year         Inventories              Sales      Inventory/Sales Ratio January 2014          1,723,921               1,313,671               1.31 July 2014                Continue reading

Consumer Confidence Meanders

The Lehmann Letter (SM) This morning The Conference Board said that Consumer Confidence rose in March to 96.2 from 94.0 in February: As this Letter observed on February 24, Consumer Confidence is on a plateau. The latest data don’t indicate a breakthrough soon. Consumer Confidence (Recessions shaded) Here’s the record since the beginning of 2013 (1985 = 100.0): 2013 January        58.4 February       68.0 March           61.9 April              69.0 May              74.3 June             82.1 July              81.0 August          81.8 September    80.2 October        72.4 November     72.0 December     77.5 2014 January        79.4 February       78.3 March           83.9 April              81.7 May              82.2 June             86.4 July              90.3 August          Continue reading

Corporate Profits Dip

The Lehmann Letter (SM) On March 25 the Bureau of Economic Analysis published fourth-quarter 2015 corporate profits. Line 45 of Table 1.12 reveals after-tax corporate profits of $1,639.6: The chart and table clearly show that this is a weak number. This is not surprising considering profit margins’ poor showing, (See the February 11, 2016 Letter.) Corporate Profits (Recessions shaded) $Billions: 2013 First Quarter           1,681.7 Second Quarter      1,688.2 Third Quarter           1,687.9 Fourth Quarter        1,713.2 2014 First Quarter           1,613.9 Second Quarter      1,700.2 Third Quarter           1,761.1 Fourth Quarter        1,700.5 2015 First Quarter           1,734.5 Second Quarter      1,844.6 Third Quarter           Continue reading

Personal Time Off

The Lehmann Letter (SM) The Letter is taking some personal time off to visit family and attend a daughter’s wedding, and plans to return on Monday, March 28. Questions or comments? Contact Mike Lehmann at (To be fully informed visit © 2016 Michael B. Lehmann  

Job Growth Pops Back

The Lehmann Letter (SM) This morning the Bureau of Labor Statistics reported the creation of 242,000 jobs and a 4.9% unemployment rate in February: The economy must create 250,000 jobs per month for the unemployment rate to continue falling, to remain below 5% and for the employment of those who have left the labor force and wish to return. Today’s report was good. Questions or comments? Contact Mike Lehmann at (To be fully informed visit © 2016 Michael B. Lehmann          

Autos Parked On High Plateau

The Lehmann Letter (SM) On March 2 the Commerce Department reported February new-vehicle sales of 17.4 million at a seasonally-adjusted annual rate: (Find motor vehicles under supplemental estimates, then open spreadsheet and click on Table 6 at bottom – Column I [scroll down for latest data].) This continues to maintain the high plateau on which autos are parked. New-Vehicle Sales (Recessions shaded) New-vehicle sales in millions at a seasonally-adjusted annual rate. 2013 January        15.4 February       15.5 March           15.4 April              15.4 May              15.4 June             15.7 July              15.7 August          15.7 September    15.4 October        15.4 November     16.1 December     15.4 2014 January        15.3 Continue reading

Manufacturing Continues To Shrink

The Lehmann Letter (SM) Today the Institute for Supply Management (ISM) reported its Purchasing Managers’ Index (PMI) at 49.5 in February: Anything below 50 = Contraction; above 50 = Expansion. The index has been below 50 for four months, but has risen in the last two months. If it rises to above 50 next month, manufacturing will no longer be shrinking. Purchasing Managers’ Index (Recessions shaded) 2015 January        53.5 February       52.9 March           51.5 April              51.5 May              52.8 June             53.5 July              52.7 August          51.1 September    50.2 October        50.1 November     48.6 December     48.0 2016 January        48.2 February       49.5 Questions or comments? Continue reading