"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 6 hours OPEC ‘Supergroup’ Keeps Oil Exports Subdued
  • 7 hours One Belt, One Road, One Direction for Precious Metals
  • 9 hours Vicious Trio Keeps Bitcoin in Chokehold
  • 11 hours How Infrastructure Is Driving A Commodity Boom
  • 12 hours What’s Really Happening With Venezuela’s “El Petro?”
  • 14 hours Gold Bull and Bear Markets
  • 1 day 5 Big Drivers of Higher Inflation Rates Ahead
  • 1 day U.S. And China To Face Off Over Aramco IPO
  • 1 day Gold Bulls, Brace Yourselves – Fed Hikes Are Coming!
  • 2 days Stocks Fail to Hold Gains, But Still No Correction
  • 2 days Cryptojacking: A New Threat Vector To Critical Infrastructure
  • 2 days Why The Next Oil Boom Will Be Fueled By Blockchain
  • 2 days 5 Things Investors Should Know About China this New Year
  • 3 days Is The South Korean Crypto-Drama Finally Over?
  • 3 days Miners’ Rally? What Rally? Watch Out for More Fake Moves!
  • 3 days Four Percent 10-year Note Yield Will Be a Floor Not a Ceiling
  • 3 days The End Is Near
  • 3 days 5 Record Breaking Gemstones Even Billionaires Can’t Buy
  • 3 days Irredeemable Currency De-tooths Savers
  • 4 days CFTC Offers Bounty For Crypto Pump And Dump Whistleblowers

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




Don't Miss A Single Story