An Overview of Recent Manufacturing Reports

Every month, several Federal Reserve Banks issue regional manufacturing reports. Rather than look at them one at a time, I like to look at them as a group to get a better overview of what is happening.

The Empire State survey wasn't good:

The Empire State Manufacturing Survey suggests a marked deceleration in manufacturing activity in December. The general business conditions index plummeted 17 points, to 10.3. The new orders and shipments indexes, while positive, also posted notable declines, and the unfilled orders index fell well below zero. The prices paid index eased slightly, and the prices received index held steady. The index for number of employees was modestly positive, while the average workweek index fell into negative territory for the first time since January. Future indexes were positive, but the degree to which activity is expected to expand over the next six months remained low compared with expectations earlier this year.

The Philadelphia Survey wasn't much better:

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell notably, from 8.2 in November to -5.7 in December (see Chart). Fifty percent of the firms reported no change in activity from November, but the percentage of firms reporting decreases (27 percent) was greater than the percentage reporting increases (21 percent) for the first time since last December. However, other broad indicators suggest continued growth this month. Demand for manufactured goods, as represented by the survey’s new orders index, remained positive and increased seven points; the current shipments index increased 14 points. However, indexes for both unfilled orders and delivery times were negative.

And the Richmond Fed showed a slowing as well

Manufacturing activity in the central Atlantic region drifted lower in December, after stabilizing somewhat in November, according to the Richmond Fed’s latest survey. The index of overall activity was pushed into negative territory by weak readings for shipments and new orders. Other indicators were mixed. District contacts reported that the pace of hiring picked up, order backlogs changed little and delivery times edged slightly lower from a month ago. In addition, capacity utilization contracted at a quicker rate and manufacturers reported that growth in inventories expanded at a slightly faster pace.

And the Chicago National Index was low as well:

November economic growth below average
The Chicago Fed National Activity Index was −0.27 in November, up from −0.89 in October. Three of the four broad categories of indicators—employment, consumption and housing, and sales, orders, and inventories—made negative contributions to the index in November, while the production and income category made a slight positive contribution. (PDF,110KB)

The benefit of looking at all of these together is you can see if one report is out of place. However, an overview indicates there is a problem across regions. That's not a good sign going into the new year.

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An Overview of Recent Manufacturing Reports

Every month, several Federal Reserve Banks issue regional manufacturing reports. Rather than look at them one at a time, I like to look at them as a group to get a better overview of what is happening.

The Empire State survey wasn't good:

The Empire State Manufacturing Survey suggests a marked deceleration in manufacturing activity in December. The general business conditions index plummeted 17 points, to 10.3. The new orders and shipments indexes, while positive, also posted notable declines, and the unfilled orders index fell well below zero. The prices paid index eased slightly, and the prices received index held steady. The index for number of employees was modestly positive, while the average workweek index fell into negative territory for the first time since January. Future indexes were positive, but the degree to which activity is expected to expand over the next six months remained low compared with expectations earlier this year.

The Philadelphia Survey wasn't much better:

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell notably, from 8.2 in November to -5.7 in December (see Chart). Fifty percent of the firms reported no change in activity from November, but the percentage of firms reporting decreases (27 percent) was greater than the percentage reporting increases (21 percent) for the first time since last December. However, other broad indicators suggest continued growth this month. Demand for manufactured goods, as represented by the survey’s new orders index, remained positive and increased seven points; the current shipments index increased 14 points. However, indexes for both unfilled orders and delivery times were negative.

And the Richmond Fed showed a slowing as well

Manufacturing activity in the central Atlantic region drifted lower in December, after stabilizing somewhat in November, according to the Richmond Fed’s latest survey. The index of overall activity was pushed into negative territory by weak readings for shipments and new orders. Other indicators were mixed. District contacts reported that the pace of hiring picked up, order backlogs changed little and delivery times edged slightly lower from a month ago. In addition, capacity utilization contracted at a quicker rate and manufacturers reported that growth in inventories expanded at a slightly faster pace.

And the Chicago National Index was low as well:

November economic growth below average
The Chicago Fed National Activity Index was −0.27 in November, up from −0.89 in October. Three of the four broad categories of indicators—employment, consumption and housing, and sales, orders, and inventories—made negative contributions to the index in November, while the production and income category made a slight positive contribution. (PDF,110KB)

The benefit of looking at all of these together is you can see if one report is out of place. However, an overview indicates there is a problem across regions. That's not a good sign going into the new year.

Read More

Personal Observations on the Shopping Season

What follows is anecdotal evidence.

I live in Houston, Texas where a big chopping center is called the Galleria. It's a giant mall with a ton of stores.. Here's a link for more information. It's pretty much centrally located in the Houston area, so it's pretty central to the area.

My dad was in town for the holidays and he stayed at a hotel in the area. My first thought was, "great. tons of traffic." But that wasn't the case. I went into town on Sunday morning and Sunday night. Getting through the area was no problem. In fact, it was less busy than rush hour.

On Monday -- Christmas Eve -- same thing. Traffic was incredibly manageable.

In previous years shopping seasons, this area of town has been a literal madhouse -- almost impossible to get through.

Again -- this is anecdotal information. For all I know, what appears to be fewer shoppers could have been buying up a storm. But the lack of traffic was pretty revealing.

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Personal Observations on the Shopping Season

What follows is anecdotal evidence.

I live in Houston, Texas where a big chopping center is called the Galleria. It's a giant mall with a ton of stores.. Here's a link for more information. It's pretty much centrally located in the Houston area, so it's pretty central to the area.

My dad was in town for the holidays and he stayed at a hotel in the area. My first thought was, "great. tons of traffic." But that wasn't the case. I went into town on Sunday morning and Sunday night. Getting through the area was no problem. In fact, it was less busy than rush hour.

On Monday -- Christmas Eve -- same thing. Traffic was incredibly manageable.

In previous years shopping seasons, this area of town has been a literal madhouse -- almost impossible to get through.

Again -- this is anecdotal information. For all I know, what appears to be fewer shoppers could have been buying up a storm. But the lack of traffic was pretty revealing.

Read More

Monday's Market Action

Monday was a holiday shortened day. That usually means lighter volume and the possibility of higher volatility. In addition, we're in the last two weeks of the year and there are holidays right in the middle of these last two weeks. So we'll have holiday shortened trading for the next 5-7 trading days. Trading won't resume at normal paces until a week from Monday (January 7).







All the charts have the exact same patter. A strong pop at the opening, followed by consolidation until the last hour or so of trading. The only exception was the Russell 2000, which showed a bit more life mid-session.

Looking at the daily charts we see the following:



The SPYs are in the middle of a triangle consolidation pattern.



The QQQQs are also consolidating, but are doing so in a rectangle pattern. However, they have broken their short-term downtrend.



The Russell 200) (IWMs) have broken through their downtrend but are also consolidating.

I have no idea what to expect over the next few weeks. The moving averages are bunched up big time, indicating the market is also looking for direction.

Read More

Monday's Market Action

Monday was a holiday shortened day. That usually means lighter volume and the possibility of higher volatility. In addition, we're in the last two weeks of the year and there are holidays right in the middle of these last two weeks. So we'll have holiday shortened trading for the next 5-7 trading days. Trading won't resume at normal paces until a week from Monday (January 7).







All the charts have the exact same patter. A strong pop at the opening, followed by consolidation until the last hour or so of trading. The only exception was the Russell 2000, which showed a bit more life mid-session.

Looking at the daily charts we see the following:



The SPYs are in the middle of a triangle consolidation pattern.



The QQQQs are also consolidating, but are doing so in a rectangle pattern. However, they have broken their short-term downtrend.



The Russell 200) (IWMs) have broken through their downtrend but are also consolidating.

I have no idea what to expect over the next few weeks. The moving averages are bunched up big time, indicating the market is also looking for direction.

Read More

So -- How Was the Shopping Season?

Not that hot.

From the WSJ:

Spurred by heavy discounting, U.S. shoppers spent furiously in the days just before Christmas. But holiday retail sales appeared to still fall short of industry expectations, setting the stage for bigger markdowns in the increasingly important post-Christmas period.

The 11th-hour rush helped strengthen a weak holiday season. From the day after Thanksgiving to midnight Monday, total retail sales, excluding automobiles, rose 3.6% over the previous year, according to MasterCard SpendingPulse, a unit of MasterCard Advisors. But factoring out spending on gasoline -- which soared thanks to a 27% average price increase since this time last year -- retail sales increased a lackluster 2.4%. Industry forecasts had predicted gains of 3.5% to as high as 4.5

"The surge at the beginning of the season and the surge at the end of the season definitely resulted in the modest growth that we saw," Michael McNamara, vice president of research and analysis for MasterCard Advisors, said in an interview yesterday. "If we didn't have those surges, it would have been a negative story."

From Bloomberg:

Last-minute purchases during the pre-Christmas weekend failed to salvage what may be the slowest holiday spending season in five years.

MasterCard Inc.'s consulting unit said yesterday that sales from Nov. 23 to Dec. 24 gained 3.6 percent. Spending in the week through Dec. 22 dropped 2.2 percent, the fourth week of declines, even after sales increased almost 20 percent over the weekend, Chicago-based ShopperTrak RCT Corp. said earlier this week.

Target Corp., the second-biggest U.S. discounter, said Dec. 24 that sales at stores open more than a year may decline in December after customer visits slowed in the weeks after Thanksgiving. Sales in November and December this year may rise 4 percent, the slowest growth since 2002, according to the National Retail Federation.

The late buying surge over the weekend is ``not going to overcome the negative forecasts,'' Frederick Crawford, managing director at Southfield, Michigan-based AlixPartners LLP, said in a Bloomberg Television interview. ``It's going to be a good start, a very weak midsection, and a strong finish. But those two barbells at the end are not going to be able to overcome these last three weeks, which have been very weak.''

It looks like sales increased, but not by as much as people wanted. In addition, there are serious questions about the impact of all the discounting on retailers bottom lines. While we'll have to wait until the next earnings season to find out, I don't think it's going to be good news.

Read More

So -- How Was the Shopping Season?

Not that hot.

From the WSJ:

Spurred by heavy discounting, U.S. shoppers spent furiously in the days just before Christmas. But holiday retail sales appeared to still fall short of industry expectations, setting the stage for bigger markdowns in the increasingly important post-Christmas period.

The 11th-hour rush helped strengthen a weak holiday season. From the day after Thanksgiving to midnight Monday, total retail sales, excluding automobiles, rose 3.6% over the previous year, according to MasterCard SpendingPulse, a unit of MasterCard Advisors. But factoring out spending on gasoline -- which soared thanks to a 27% average price increase since this time last year -- retail sales increased a lackluster 2.4%. Industry forecasts had predicted gains of 3.5% to as high as 4.5

"The surge at the beginning of the season and the surge at the end of the season definitely resulted in the modest growth that we saw," Michael McNamara, vice president of research and analysis for MasterCard Advisors, said in an interview yesterday. "If we didn't have those surges, it would have been a negative story."

From Bloomberg:

Last-minute purchases during the pre-Christmas weekend failed to salvage what may be the slowest holiday spending season in five years.

MasterCard Inc.'s consulting unit said yesterday that sales from Nov. 23 to Dec. 24 gained 3.6 percent. Spending in the week through Dec. 22 dropped 2.2 percent, the fourth week of declines, even after sales increased almost 20 percent over the weekend, Chicago-based ShopperTrak RCT Corp. said earlier this week.

Target Corp., the second-biggest U.S. discounter, said Dec. 24 that sales at stores open more than a year may decline in December after customer visits slowed in the weeks after Thanksgiving. Sales in November and December this year may rise 4 percent, the slowest growth since 2002, according to the National Retail Federation.

The late buying surge over the weekend is ``not going to overcome the negative forecasts,'' Frederick Crawford, managing director at Southfield, Michigan-based AlixPartners LLP, said in a Bloomberg Television interview. ``It's going to be a good start, a very weak midsection, and a strong finish. But those two barbells at the end are not going to be able to overcome these last three weeks, which have been very weak.''

It looks like sales increased, but not by as much as people wanted. In addition, there are serious questions about the impact of all the discounting on retailers bottom lines. While we'll have to wait until the next earnings season to find out, I don't think it's going to be good news.

Read More

Happy Holidays

Merry Christmas, Happy Holidays or whatever you celebrate.

I'll be back on Wednesday morning.

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Happy Holidays

Merry Christmas, Happy Holidays or whatever you celebrate.

I'll be back on Wednesday morning.

Read More