U.S.: Inventory Overhang For Business Investment Goods

By The National Bank of CanadaMarket OverviewJun 29, 2012 03:08AM ET

www.investing.com/analysis/u.s.:-inventory-overhang-for-business-investment-goods-128082

U.S.: Inventory Overhang For Business Investment Goods

By The National Bank of Canada | Jun 29, 2012 03:08AM ET

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The U.S. economy is showing tangible signs of an inventory overhang for business investment goods. According to just-released data, new orders for nondefence capital goods excluding aircraft rose for the first time in three months in May. Alas, this was not enough to make up for previous losses. As today’s Hot Chart shows, new orders are actually down an annualized 5% so far in Q2. In our opinion, new orders are likely to remain soft in the coming months on the back of declining activity in Europe and the uncertainty about U.S. corporate taxes in the coming year. Unfortunately, the softness in new orders comes at time when the inventory-to-sales ratio for business investment goods is at its highest level in over a decade outside a recession. In our opinion, this heralds a production slowdown in the coming months.

US Inventory overhang for business investment goods

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U.S.: Inventory Overhang For Business Investment Goods

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