Empire State Up; CPI Shows Moderate Increase

From the NY Fed:

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved for the sixth consecutive month in January. The general business conditions index climbed 11 points, to 15.9. The new orders and shipments indexes posted similar increases, and the unfilled orders index rose above zero. Both the prices paid index and the prices received index rose significantly, with the latter moving above zero for the first time in more than a year. Employment indexes advanced into positive territory. Future indexes were highly optimistic; activity and employment were widely expected to improve over the next six months. Prices, however, were expected to continue to climb in the months ahead.

Here is a chart from the report:


Over the last two months the number dropped to near 0, leading to some concern. But the numbers have rebounded indicating this region is doing well. Also note that this is the 6th straight month of positive readings; this is not a one time event but a clear trend.

From the BLS:

On a seasonally adjusted basis, the December Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the index increased 2.7 percent before seasonal adjustment.

There is plenty of good news in this report. First, inflation is moderate but not crushing. A little inflation is a good thing because it indicates either demand pull or cost push inflation (or most likely a combination thereof) exists. But neither demand not cost is strong enough to lead to runaway inflation. Secondly, this report indicates that the deflationary scare from 2008 is more or less over at this point. To that end, consider these charts:


Click for a larger image.

The month to month CPI numbers have shown continued increase since August and are up 7 of the last 8 months.


Click for a larger image

While the YOY number is 2.7%, remember the comparison is to a very low December 2008 level. That means the YOY numbers for the next two months will be high.

Overall, both of these numbers were very good.

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Industrial Production and Empire State Survey Show Increasing Weakness

From the WSJ:

The Federal Reserve reported that industrial production fell 0.5% in February after rising 0.1% in January. "The industrial sector remains in recession," said Daniel Meckstroth, chief economist of the Manufacturers Alliance/MAPI trade group.

In a separate report, the Fed's New York district bank said its Empire State manufacturing survey stood at minus 22.23 in March, down from minus 11.72 in February. The previous low was minus 19.6, in November 2001. "New York manufacturing is rapidly slowing and the record-low measure of activity makes it clear the economy is in trouble," said Joel Naroff, president of Naroff Economic Advisors.

On the chart notice the year-over-year change in production was pretty even from about April 2007 to last month. Yesterday's figure moves the number lower in a big way. As mentioned below, one month does not a trend make.

In Fed's industrial production index is a very broad measure of production. It includes everything made or consumed in the US. Note the broad nature of the decreases:

The production of consumer goods decreased 0.6 percent in February with declines in the production of both consumer durables and consumer nondurables.

The output of business equipment edged up 0.1 percent in February, as an increase in information processing equipment outweighed decreases both in transit equipment and in industrial and other equipment.

The output of defense and space equipment declined 0.3 percent in February after having increased 1.0 percent in January.

The output of construction supplies fell 0.8 percent in February after having decreased 0.6 percent in January; the level of production in February was nearly 1 percent below its year-earlier level and 5.2 percent below its peak in 2006. The output of business supplies declined 1.1 percent in February.

The production of materials fell 0.5 percent in February after having changed little in January.

As for the New York Fed, their report was not encouraging:

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated further in March. The general business conditions index fell another 10½ points to -22.2, a reading that eclipsed the record-low of -19.6 set in November 2001. Although the new orders index rose modestly, the shipments index edged down, and both remained in negative territory. The prices paid index rose for the third consecutive month, reaching its highest level since mid-2006, but the prices received index declined. Employment indexes remained close to zero. Future indexes were generally positive and up slightly for the month, but still well below levels of late last year. However, the future employment indexes rebounded noticeably after falling steeply in February.

And here's the chart:



That's gonna leave a mark.

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Empire State Drops But Still Positive

From the NY Fed:

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to improve in September, but at a slower pace than in the past few months. The general business conditions index fell to 14.7.

The new orders index dropped, while the shipments index declined sharply. The prices paid index, although elevated, held steady, as the prices received index rose several points. The number of employees index inched upward. Future indexes conveyed continued optimism, with the future shipments index increasing notably. The capital expenditures index fell for a second consecutive month.

This report jibes with the latest national Fed survey on industrial production:

Industrial production rose 0.2 percent in August after an increase of 0.5 percent in July. At 114.4 percent of its 2002 average, total industrial production in August was 1.7 percent above its year-earlier level. Manufacturing output fell 0.3 percent in August after five consecutive months of increases, mining output dropped 0.6 percent, but unusually hot weather contributed to an increase of 5.3 percent in the output of utilities.

....

The production of consumer goods edged up 0.1 percent in August. The production of durable consumer goods decreased 1.0 percent; the drop was due mainly to a reduction of 2.1 percent in the output of automotive products. Elsewhere, the output of home electronics declined 0.2 percent; the output of appliances, furniture, and carpeting fell 0.6 percent; but the index for miscellaneous durable goods rose 0.2 percent. The production of nondurable non-energy consumer goods fell 0.3 percent; decreases in the production of foods and tobacco, of clothing, and of paper products more than offset an increase in the production of consumer chemical products. Boosted by residential sales of electricity, the index for consumer energy goods rose 3.5 percent.

The index for business equipment fell 0.2 percent in August. The output of transit equipment declined 0.2 percent, as a reduction in motor vehicle assemblies more than offset an increase in the production of civilian aircraft. The index for industrial and other equipment decreased 0.6 percent; although farm machinery increased for the second month in a row, other machinery categories registered declines. The production of defense and space equipment fell 0.6 percent.

The index for construction supplies stayed flat in August. The index for business supplies rose 1.0 percent as a result of an increase in the commercial sales of electricity; the output of non-energy business supplies was unchanged.

The production of materials rose 0.2 percent in August. Within non-energy materials, the index for durable materials fell 0.2 percent, and the index for nondurable materials fell 0.1 percent. The decrease in durable materials reflected reduced output of motor vehicle parts as well as decreases in a variety of equipment parts. Among nondurable materials, declines in the output of textiles and of chemicals more than offset an increase in the production of paper. The output of energy materials climbed 1.5 percent.

The key to these reports is from the Fed's Industrial Production report: Manufacturing output fell 0.3 percent in August after five consecutive months of increases. In addition, the Empire State Index is still at an expansionary level. My guess is we're simply seeing a natural drop after some increases.

Remember that exports are doing very well. They increased smartly in the latest report and the dollar makes exports very competitive internationally. I wouldn't expect this number to radically drop in the near future so long as the international economic scenario remains fairly strong.

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Empire State Drops But Still Positive

From the NY Fed:

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to improve in September, but at a slower pace than in the past few months. The general business conditions index fell to 14.7.

The new orders index dropped, while the shipments index declined sharply. The prices paid index, although elevated, held steady, as the prices received index rose several points. The number of employees index inched upward. Future indexes conveyed continued optimism, with the future shipments index increasing notably. The capital expenditures index fell for a second consecutive month.

This report jibes with the latest national Fed survey on industrial production:

Industrial production rose 0.2 percent in August after an increase of 0.5 percent in July. At 114.4 percent of its 2002 average, total industrial production in August was 1.7 percent above its year-earlier level. Manufacturing output fell 0.3 percent in August after five consecutive months of increases, mining output dropped 0.6 percent, but unusually hot weather contributed to an increase of 5.3 percent in the output of utilities.

....

The production of consumer goods edged up 0.1 percent in August. The production of durable consumer goods decreased 1.0 percent; the drop was due mainly to a reduction of 2.1 percent in the output of automotive products. Elsewhere, the output of home electronics declined 0.2 percent; the output of appliances, furniture, and carpeting fell 0.6 percent; but the index for miscellaneous durable goods rose 0.2 percent. The production of nondurable non-energy consumer goods fell 0.3 percent; decreases in the production of foods and tobacco, of clothing, and of paper products more than offset an increase in the production of consumer chemical products. Boosted by residential sales of electricity, the index for consumer energy goods rose 3.5 percent.

The index for business equipment fell 0.2 percent in August. The output of transit equipment declined 0.2 percent, as a reduction in motor vehicle assemblies more than offset an increase in the production of civilian aircraft. The index for industrial and other equipment decreased 0.6 percent; although farm machinery increased for the second month in a row, other machinery categories registered declines. The production of defense and space equipment fell 0.6 percent.

The index for construction supplies stayed flat in August. The index for business supplies rose 1.0 percent as a result of an increase in the commercial sales of electricity; the output of non-energy business supplies was unchanged.

The production of materials rose 0.2 percent in August. Within non-energy materials, the index for durable materials fell 0.2 percent, and the index for nondurable materials fell 0.1 percent. The decrease in durable materials reflected reduced output of motor vehicle parts as well as decreases in a variety of equipment parts. Among nondurable materials, declines in the output of textiles and of chemicals more than offset an increase in the production of paper. The output of energy materials climbed 1.5 percent.

The key to these reports is from the Fed's Industrial Production report: Manufacturing output fell 0.3 percent in August after five consecutive months of increases. In addition, the Empire State Index is still at an expansionary level. My guess is we're simply seeing a natural drop after some increases.

Remember that exports are doing very well. They increased smartly in the latest report and the dollar makes exports very competitive internationally. I wouldn't expect this number to radically drop in the near future so long as the international economic scenario remains fairly strong.

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Empire State Survey Pretty Good; Industrial Production Up

From the NY Fed:

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to improve in August. The general business conditions index held steady at 25.1.

The new orders and shipments indexes remained at similarly high levels, while the unfilled orders index continued to hover near zero. The prices paid index also remained essentially unchanged, while the prices received index fell to its lowest level in two years. Employment indexes were positive and above their July readings. Future indexes conveyed steady optimism, although the future shipments index turned sharply lower. While positive, future price indexes fell, as did the capital spending and technology spending indexes.

Here's the accompanying chart.



From the Federal Reserve:

Industrial production rose 0.3 percent in July after an increase of 0.6 percent in June. At 113.9 percent of its 2002 average, total industrial production in July was 1.4 percent above its year-earlier level. In July, manufacturing output moved up 0.6 percent and mining output advanced 0.7 percent, but the output of utilities fell 2.1 percent. Capacity utilization for total industry edged up to 81.9 percent, a rate 0.5 percentage point below the level in July 2006 but 0.9 percentage point above its 1972-2006 average.

....

Manufacturing output rose 0.6 percent in July, as production of both durable and nondurable goods increased. The increase in manufacturing followed a similarly sized gain in June. The production of durable goods rose 0.9 percent in July, and gains were widespread across components. The production of nondurable goods rose 0.3 percent, after a gain of 0.4 percent in June. Substantial advances in July occurred in paper, petroleum and coal products, and chemicals. However, the output indexes for textile and product mills, apparel and leather products, and plastics and rubber products all declined. The output of the non-NAICS manufacturing industries (logging and publishing) rose 0.8 percent. The factory operating rate advanced 0.3 percentage point, to 80.7 percent, a rate about 1 percentage point above its 1972-2006 average.

However, the year-over-year change has been declining for a bit:



Both of these are welcome reports considering the overall market tenor of the last 3-4 weeks. Manufacturing continues to be a bright spot in the economy. My guess is the very low position of the dollar has a lot to do with this.

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Empire State Index Shows Strength

From the NY Fed:

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to improve in July. The general business conditions index held near its June level, at 26.5.

The new orders index climbed for a fourth consecutive month to its highest level in more than a year, while the shipments index remained near its June level. The inventories index tumbled sharply into negative territory. The prices paid index, although elevated, eased modestly, as the prices received index held steady. Employment indexes were modestly positive. Future indexes conveyed significant optimism, with notable improvements in the outlook for employment and capital spending.

I'm a big fan of these regional Federal Reserve reports. They give us a nice regional picture of good, general business information.

This release gives us further confirmation of a strengthening manufacturing sector. However, the inventory questions could indicate a period of slowing activity in the next few months. That situation -- as with most in the economics realm -- will have to play out.

I should add that I am not a big fan of the future outlook question because it's really easy for those being polled to be really optimistic.

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Two Manufacturing Reports Show Slow Growth

I missed the NY Fed's manufacturing survey on Monday. Here's the main point of the report:

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers were flat again in April. The general business conditions index edged up 2 points, to 3.8, rebounding only marginally from March.

New orders were just above 0. Shipments dropped.

Here's some bad news for the Fed. Prices paid increased while prices received dropped slightly. The prices received index has dropped for three-straight months. This may indicate producers are having to cut prices to move product. In addition, inventories have increased three straight months, indicating future production may drop to prevent more of an inventory build-up.

The Philadelphia Fed reported similar conditions:

Activity in the region’s manufacturing sector was basically unchanged again this month, according to firms polled for the Business Outlook Survey. The index for general activity was near zero, and indicators for new orders, shipments, and employment were only slightly positive, suggesting little change from March. Regarding future activity, the region’s manufacturing executives were somewhat more optimistic this month than they were in March.

The Philly area also reported similar pricing problems as the New York Area -- increasing inputs and stagnant prices received:

Area manufacturers reported higher costs for inputs again this month. The prices paid index edged three points higher and has now increased for three consecutive months. Thirty-seven percent of the firms reported higher input prices, up seven points from March; 13 percent reported lower input prices in April.

Despite increased costs, fewer firms reported higher prices for their own goods this month: 17 percent reported higher prices, down nine points from March. The prices received index fell 11 points, to 5.2, its lowest reading since August 2005.

These two reports indicate the decline in Capex spending may be hitting home with manufacturers.

In addition, manufacturers are just hanging on in positive/expansion territory.

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