• 15 hours Saudis Eye Billions As Stocks Get Emerging Market Boost
  • 18 hours Airbnb In Acquisition Mode Ahead Of IPO
  • 21 hours Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 23 hours Champagne Sales Slow As European Economic Worries Grow Louder
  • 2 days Putin Signs “Digital Iron Curtain” Into Law
  • 2 days Russian Metals Magnate Sues U.S. Over Sanctions
  • 2 days Tesla Looks To Jump Into Indian Market
  • 2 days Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 3 days Homeowners Experiment With Risky New Investment Trend
  • 3 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 3 days De Beers To Expand World’s Most Profitable Diamond Mine
  • 3 days Ford CEO Gets Raise After Massive Layoff Round
  • 4 days Germany’s Flirtation With Recession Could Cripple The Global Economy
  • 4 days Where To Look As Gold Miners Inch Higher
  • 5 days Google Faces Billions In Fines From European Regulators
  • 5 days The Energy Industry Has A Millennial Problem
  • 6 days Russian Banks Scramble For Sanction Loopholes
  • 6 days Gold ETFs Take A Hit After Four-Month Run
  • 7 days European Union Takes Aim At Ten New Tax Havens
  • 7 days Goldman Defends Trillion-Dollar Corporate Buyback Spree
The Chatroom Cartel Running Global Bond Markets

The Chatroom Cartel Running Global Bond Markets

Eight major banks have been…

Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

  1. Home
  2. Markets
  3. Other

Empire State and Philly Fed Reports Positive: Worst Over for Manufacturing?

On Tuesday, the Empire State manufacturing region returned to positive territory following seven months of contraction.

Today, the Philadelphia Fed manufacturing region returned to positive territory following five months of contraction.

Is the worst over for manufacturing or is this simply a breather?

Let's start with a look at the Empire State and Philadelphia Fed reports.


Empire State

Empire State 2016-03-14A

The headline general business conditions for the Empire State region climbed seventeen points to 0.6, its first positive reading since July of last year. The new orders and shipments indexes rose well above zero for the first time in several months, pointing to an increase in both orders and shipments. Labor market conditions were little changed, with employment and the average workweek holding fairly steady.


Empire State Details

That's quite an improvement in the New York region. Let's turn to Philadelphia.


Philly Fed Index

Philly Fed 2016-03-16


Philly Fed Details

Philly Fed 2016-03-16A


Fundamental Change?

Here's the key question: Do these reports represent a fundamental change?

I suspect not, for numerous reasons:

  1. Slowing retail sales (See Retail Sales Down, January Sales Revised to -0.4%)
  2. Inventory-to-Sales reports that look horrific (I will report on that later today)
  3. CEO hiring expectations (see 38% of Companies to Reduce Employment in 2016, Only 29% Expect Increase: Five Consequences)
  4. That 82.8% Expect Real Incomes Will Decline in 2016.
  5. The global economy still looks anemic.
  6. The US dollar, although starting to fall, is strong enough to hamper exports.

In regards to point four, It's not just the consumer expectation of falling real incomes, Obamacare premiums and rising rents nearly guarantee that outcome.

So why the jump? Things don't fall or rise forever. I had actually been expecting a jump; I just did not know when. This was the month.

Orders get put off, and off, and at some point they have to rise, from very depressed levels. Stabilization or even slight improvements from here do not represent good times for manufacturers.

This bounce looks good, but it must be viewed in light of falling orders for months on end that had to turn at some point, for a while.

 

Back to homepage

Leave a comment

Leave a comment