US Factories Crushed By Strong Dollar

"Government statistics are always suspect, for at least one obvious reason: Modern economies are way too big and complex to measure in real-time. So virtually every number is revised in the months after its release, frequently to the point of saying something very different. But by then lots of new data has come out and no one cares about the old numbers.

So to the extent that any government report is trustworthy, it’s the trend and not the data point that matters. And lately a whole slew of data points have been coalescing into downtrends that should be taken seriously. Today’s example is durable goods, which measures the health of US factories making big, long-lasting things like cars, planes and refrigerators. Bloomberg this morning put out a good analysis showing how “core” capital goods orders — for things that don’t bounce around by double-digit rates every month — is now firmly in a downtrend, featuring the following charts:

 

 

The obvious explanation is that the dollar’s exchange rate is way up, making US goods more expensive and foreign goods cheaper and leading the rest of world to buy less from us. Domestic factories are seeing their order books shrink and are as a result producing less. They’re also hiring fewer and/or firing more workers. And the downtrend seems to be gaining momentum. Core orders in particular turned down in mid-2014 and are now in free-fall..."

at http://dollarcollapse.com/currency-war-2/us-factories-crushed-by-strong-dollar/