Empire Manufacturing Index Misses Consensus Of 8.0, Prints At 7.1

Tyler Durden's picture

The Empire State Mfg index rose modestly from 5.08 to 7.1, yet still missed expectations of 8.0. In a nutshell, price indexes fall, the employment indexes climb, and most critically, as this is a survey after all, the degree of optimism continues to weaken.

From the release:

The Empire State Manufacturing Survey indicates that
conditions improved modestly in August for New York manufacturers. The
general business conditions index rose 2 points from its July level, to
7.1. The new orders and shipments indexes both dipped below zero for
the first time in more than a year, indicating that orders and shipments
declined on balance; the unfilled orders index was also negative. The
indexes for both prices paid and prices received inched down, while
employment indexes were positive and higher than last month. The
six-month outlook weakened; though future indexes were generally still
positive, many fell in August, with the notable exceptions of the
future employment and capital expenditures indexes, which climbed after
falling last month.

In a series of supplementary questions,
manufacturers were asked about their capital spending plans. Looking
ahead to the next six to twelve months, 37 percent of respondents
indicated that they expected to increase capital spending relative to
its level in the past six to twelve months, while just 13 percent
planned reductions. Of those predicting increased capital spending, 27
percent noted that "a considerable fraction" of the increase reflected
investment that had been postponed because of the recession; 41
percent of respondents had given this same response in a similar survey
back in January. Another 46 percent of those surveyed this month
attributed "some" of the spending increase to the recession. The most
commonly cited factors behind increased investment were high expected
growth in sales and a need to replace capital goods other than IT
(information technology) equipment. The most widely cited factors
behind steady or decreased capital investment in the current survey
were low expected sales growth, low capacity utilization, and limited
need to replace non-IT capital goods.

Growth in Business Activity Remains Modest
The general business conditions index inched
up two points in August, to 7.1. Still close to its July value, the
index reading suggested that business activity improved over the month,
but at a very modest pace. Roughly 30 percent of respondents reported
that conditions had improved, while 22 percent reported that conditions
had worsened. The new orders index fell below zero for the first time
in over a year, dropping 13 points to -2.7—an indication that, on
balance, manufacturers saw orders decline slightly. Following this same
pattern, the shipments index also moved below zero, dropping 18 points
to -11.5. Since April, this index has fallen a cumulative 44 points.
The unfilled orders index was in negative territory for a fifth
consecutive month, but inched up 6 points to -10.0. The delivery time
index rose to zero. The inventories index was positive again in August,
but fell a few points to 2.9.

Price Indexes Fall, Employment Indexes Climb
Both price indexes declined. Continuing its
downward trend for a third consecutive month, the prices paid index
fell 5 points to 20.0, suggesting that the pace of input price
increases slowed. The prices received index, at -2.9, remained negative
for a second consecutive month, a sign that selling prices were
slightly lower in August. Employment indexes were positive and higher
than in July, indicating that employment levels and the average
workweek expanded in August. The index for number of employees had
fallen in June and July, but climbed 6 points, to 14.3, this month. The
average workweek index had dipped below zero last month, but rose 17
points to 7.1.

Degree of Optimism Continues to Weaken
Future indexes were generally positive,
indicating that manufacturers expected conditions to improve in the
months ahead. Nevertheless, many indexes fell in August, a sign that the
level of optimism was slipping, as it had for the past few months. The
future general business conditions index fell 6 points to 35.7, a
reading well below the levels observed earlier this year. The future
new orders index dipped 3 points to 31.4, and the future shipments
index retreated 6 points to 25.7. The future prices paid index dropped
11 points to 30.0, while the future prices received index increased to
22.9. Future employment indexes rose: the index for expected number of
employees climbed to 20.0, and the future average workweek index
advanced to 7.1 after dipping below zero last month. Reversing two
months of decline, the capital expenditures index moved up 9 points to
22.9. The technology spending index rose to 8.6.

Full report.

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firstdivision's picture

The markets seem to love this info for a nice dead cat bounce.  Never mind that it plunged to very low levels, and is still way down.  The HFT algos all received a "buy" signal. 

aint no fortunate son's picture

It could've come in at -7.1 and the algos would have come in buying. Like it or not, these guys are gonna game a short squeeze any way they can. Good news, bad news, no news.. its all the same to the algos.

firstdivision's picture

Currently all algos are programmed with a statement (X=a^2) where a = all economic numbers, to help eliminate any an all negative signs and make the numbers seem fantabulous.

HelluvaEngineer's picture

So far it doesn't seem to be working very well for them.

RRA_223's picture

Agreed.   "Beat expectations" would result in a huge 100+ point rally on signs of the Recovery.

"meets expectations" is also perversely the same as beating expectations - and results in an 80-100+ point rally on signs of the Recovery.

"Miss expectations" is another way of saying "this is not news" and back to the status quo of +/- 20 point days - as we continue to wait for that promised Recovery.


There is no negative in this news cycle, it seems...  as we keep trying to find any sampling bias that might possible support our theories of the Anytime, Now; Recovery. 

Bigger Dickus's picture

How is CNBC gonna spin this?

"Empire Manufacturing Index climbs 40% on economic data!"

papaswamp's picture

The key to the future...

" The new orders and shipments indexes both dipped below zero for the first time in more than a year, indicating that orders and shipments declined on balance; the unfilled orders index was also negative. "

nmewn's picture

"The Empire State Mfg index rose modestly from 5.08 to 7.1, yet still missed expectations of 8.0."

Where can I find a salaried position to produce something, have an expense account, vacation time, annual bonus, and consistently miss expectations plus or minus 10%?

Oh...never mind ;-)

SheepDog-One's picture

Man, we really need Leo to come around with talk about 'massive upside surprises soon' and some pretty Chinese solar stock charts!

firstdivision's picture

Where is Leo at to tell us how all his buys last week are working out for him? 

Cursive's picture

The little robotics start-up that I work with is teetering on the brink of bankruptcy.  Went into $2M of debt over the last 18 months trying to survive.  Haven't sold anything for over 3 months.  Two customers not willing to pay on installed units.  Sales leads not moving.  Customers seem very reluctant to make any moves.  I give this little company 2 months tops unless a white knight emerges.

mephisto's picture

To all above who are wondering why we are only off 30-40bps, remember its Monday, usually we are up 70-100 bps at this stage. We are about 1% below where the usual Monday morning pumping would get us to.

I think if the dealers see client bids we will pop up to flat for the morning before selling off later. If not, look out below.

This is a classic Tyler Durden macro situation where the key to the DJI behaviour is something obscure like the Irish government CDS or the funding situation of some regional Hungarian bank. Ie scarily FUBAR and difficult to explain to those without a Bloomberg terminal. Good luck everybody. 

firstdivision's picture

Halfway to green now ;) 

Feds buying SPOOS like they were on sale.

Turd Ferguson's picture

The new easiest trade in the world:

Let the market open down 50-100 points. Then buy the ES at 9:35 or so.

Works every time these days.

firstdivision's picture

TNA FTW from opening to now, then sell at 5% to go to the strip club and see some T&A.

Chemba's picture

"Empire Manufacturing"  What the hell is "manufactured" in NYS?  I-heart NY T-shirts?  It's like the "Philly-Fed index", which as best as I can tell would be a good measure if one needed to track the production of cheese-steak sandwiches.

MachoMan's picture

Quite a few firearms companies, notably Kimber...  Good product.

Bankster T Cubed's picture

front run  fed monetization of bonds and stocks

as they totally destroy all hope of real recovery

pizzgums's picture

Who cares about New York? It's a loser state that has lost all pretense of being a manufacturing center. Anyone with any sense got the hell out of there a long time ago.

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