This Friday the Census Bureau will release the March report on durable goods new orders and shipments. Historically new orders for durable goods have been one of the best indicators of the economy’s future path.
Unfortunately, the durable goods survey only measures domestic manufacturing. Seems quaint, doesn’t it? But the Census Bureau is insistent on that:
This survey collects statistics on domestic manufacturing activities of companies located in the United States. Activities of foreign affiliates or subsidiaries should be excluded.
But with the increased offshoring of U.S. manufacturing, we’re seeing signs in some industries that U.S. spending can pick up, without any gains at all. Take computers, for example. Over the past year, new orders for domestically-produced computers have fallen by 2%. Meanwhile, imports of computers have risen by about 50%.
We’re seeing the same thing in the auto sector. New orders for motor vehicles and parts from domestic manufacturers have risen by about 2% over the past year. But imports have soared by more than 50%.
This is a sign of the continued hollowing out of the American manufacturing sector. Imports soar, while domestic production barely responds. I am going to be watching for a continuation of this trend on Friday.