Philly, Empire Feds Smash Expectations On Soaring Optimism Despite Deterioration Labor Conditions, Inflation Spike
By Tyler Durden
There is seemingly no stopping the runaway train that is the economic momentum of the past month, as confirmed by the just released Philly and Empire Fed surveys, which printed at 21.5 and 9.0, smashing expectations of 9.1 and 4 respectively, in fact printing above the highest estimate for both reports, and well above the recent print of 7.6 and 1.5. The one blemish was the sharp drop in labor market conditions at the Empire Fed, which saw a big drop in both employment and hours worked.
First, looking at the Empire Fed, which jumped from 1.5 to 9, we get the following component data:
- Prices paid rose to 22.6 vs 15.5
- New orders rose to 11.4 vs 3.1
- Number of employees fell to -12.2 vs -10.9
- Work hours rose to -7 vs -10.9
- Inventory rose to -13.9 vs -23.6
* * *
The Philly Fed, which soared even more from 7.6 to 21.5, was even more impressive:
- Dec. prices paid rose to 29.4 vs 27.5
- New orders fell to 13.9 vs 18.6
- Employment rose to 6.4 vs -2.6
- Shipments rose to 22.0 vs 19.5
- Delivery time rose to 7.6 vs 6.1
- Inventories fell to 1.1 vs 13.4
- Prices received fell to 5.8 vs 16.0
- Unfilled orders rose to 5.7 vs 4.1
- Average workweek rose to 9.8 vs 7.4
The commentary on the Empire Fed was optimistic with the exception of the labor market which remained weak:
Business activity grew modestly in New York State, according to firms responding to the December 2016 Empire State Manufacturing Survey. The headline general business conditions index climbed eight points to 9.0. The new orders index rose to 11.4, and the shipments index was unchanged at 8.5. Labor market conditions remained weak, with manufacturers reporting declines in employment and hours worked. Inventories continued to fall, and delivery times shortened. The prices paid index rose seven points, pointing to a pickup in input price increases, while the prices received index showed only a slight increase in selling prices. Indexes for the six-month outlook conveyed a high degree of optimism about future conditions, with the index for future business conditions rising to its highest level in nearly five years.
Business Activity Picks Up
Manufacturing firms in New York State reported that business activity expanded in December. The general business conditions index rose eight points to 9.0, its highest level since April. Thirty-two percent of respondents reported that conditions had improved over the month, while 23 percent reported that conditions had worsened. The new orders index climbed eight points to 11.4, indicating that orders increased at a solid clip, and the shipments index held steady at 8.5, pointing to an ongoing increase in shipments. The unfilled orders index edged two points higher to -10.4, and at -7.8, the delivery time index signaled shorter delivery times. The inventories index remained negative, indicating that inventory levels continued to fall, though at a slower pace than last month.
As noted above, labor market conditions remained weak: as in November, both employment indexes remained negative in December. The index for number of employees was little changed at …read more
