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Empire Manufacturing Misses, Prints At 11.92 On Expectations Of 12.50, Prior Revised From 10.57 To 9.89

Tyler Durden's picture


US Empire Manufacturing (Jan) M/M 11.92 vs. Exp. 12.50 (Previous number getting the traditional BLS treatment and being revised from 10.57 to 9.89 to make the number a beat). Important Empire index components: Employment: 8.4 vs. Prev. -3.4;  an improvement in New Orders: 12.4 vs. Prev. 2.6; and the most critical and inflationary one: Prices Paid: 35.79 vs. Prev. 28.40. Also no surprise: inventories, that good old stand by jumps from -15.91 to 4.21. From the release: "the most widely cited factor restraining hiring plans was low expected sales growth (31 percent)."

From the release:

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved in January. The general business conditions index rose 2 points to 11.9. The new orders index moved up 10 points to 12.4, and the shipments index surged 18 points to 25.4. After a sharp decline last month, the inventories index rose above zero. Employment indexes also climbed into positive territory. Both the prices paid and prices received indexes rose, pointing to an acceleration in both input prices and selling prices. Future indexes conveyed a high level of optimism, with the future general business conditions index advancing to a level not seen since early 2010, while future price indexes climbed to multiyear highs.

In a series of supplementary questions, respondents were asked about expected changes in the size of their firms’ workforces and about the reasons for the changes. Slightly more than half of respondents indicated that they expected their workforce to increase in the year ahead, while just 15 percent predicted declines in the total number of workers. In last February’s survey—when a similar question was asked—an even larger majority, 64 percent, predicted increases. The current results were slightly more positive for larger establishments (150 or more employees) than for smaller establishments. When those respondents intending to increase employment were asked to identify key factors underlying their plans, the vast majority (77 percent) ranked high expected sales growth as the most important. Conversely, the most widely cited factor restraining hiring plans was low expected sales growth (31 percent).

Prices Accelerate

Both prices paid and prices received indexes were positive and markedly higher this month. The prices paid index rose 7 points to 35.8, its highest level in several months, with 41 percent reporting increased input prices. The prices received index advanced 12 points to 15.8, its highest level since late 2008; 20 percent of respondents boosted selling prices in January, up from 10 percent in December. Employment indexes climbed above zero, suggesting that employment increased this month after declining last month. The index for number of employees moved up 12 points to 8.4, while the average workweek index rose 17 points, to 2.1.

And lo and behold, the hopium consumption is at an all time high:

Very Favorable Outlook for the Months Ahead

Future indexes were at relatively high levels, suggesting that manufacturers widely expected conditions to continue improving over the next six months. The future general business conditions index rose 10 points to 59.0, with 61 percent of respondents expecting conditions to be better in six months. The future new orders and shipments indexes remained at similarly high levels. The future inventories index rose 16 points to 14.7, a record high, indicating that inventory levels were expected to increase in the near future as business activity improved. Future price indexes, already elevated, inched higher—a sign that respondents expected both input prices and selling prices to accelerate. Future employment indexes, though slightly lower, were positive, indicating that employment levels were expected to continue increasing. The capital expenditures index moved up significantly, to 34.7, and the technology spending index edged up to 22.1.

Full report.

Elsewhere, the spin from Goldman is beyond painful...

BOTTOM LINE: Empire index starts 2011 with a bang, as modest increase in headline index masks much larger gains in orders, shipments, and employment. December revised down due to seasonal recalculation.

Empire index +2 (2, +1), with +1 judgmental adjustment for composition of answers to specific aspects of business.

Empire index +2.03 points to 11.92 in Jan vs. median forecast +12.5.

1. The Empire index rose 2.03 (hey, let's call it 2) points in January from a level that was revised down by about 0.6 points due to the annual recalculation of seasonal factors. This increase is actually a bit larger than the median forecast just ahead of the report-an expected increase of 1.93 points to +12.5. At 11.92 in January, the index continues to point to firm growth in manufacturing. [ZH: additionally, if December had been revised to -999,999,999 this would have been the greatest beat in the history of the universe]

2. Responses to questions about specific aspects of business in December were much stronger than suggested by the 2-point headline increase. For example, the index for new orders advanced 10.4 points to +12.4 while the shipments index surged more than 18 points to +25.4. The employment index also rose, to +8.4 from -3.4. The only index suggesting vulnerability was 20-point swing in the inventories index. On the basis of this much-firmer-than-headline gain in key subindexes, we have added a +1 judgmental adjustment to the US-MAP reading. [ZH: and this is how a consensus miss becomes a +1 event per Goldman. Sigh]


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Tue, 01/18/2011 - 09:33 | 883754 Sudden Debt
Sudden Debt's picture

It was because of the TERRIBLE SNOWMAN I TELL YA!!


Tue, 01/18/2011 - 09:33 | 883755 EscapeKey
EscapeKey's picture

Ah, yes, but THAT doesn't matter, this however does (as it's better than expected):

WASHINGTON (MarketWatch) -- Conditions for manufacturing in the New York region improved slightly in January from December, the New York Federal Reserve Bank said Tuesday. The bank's Empire State Manufacturing index rose to 11.9 in January from a revised 9.9 in December. Economists had forecast the index would rise to 13. Indexes for new orders, shipments and employment improved in January. Both the prices-paid and the prices-received indexes jumped in January. After a sharp decline in December, the index for inventories rose above zero. A gauge of future activity jumped to its highest level since early last year, suggesting that manufacturers expect conditions to improve over the next six months.

In other news, the amount of dog shit on NY roads slightly declined today, a fact which sent a strongly bullish signal to investors.


Tue, 01/18/2011 - 09:33 | 883756 papaswamp
papaswamp's picture

meh..wasn't a bad report...but it sure shows inflation heating up. 

Tue, 01/18/2011 - 09:40 | 883767 dcb
dcb's picture

can someone interpret the meaning. from the post it is a miss, below expectations. I of curse think it means nothing as the employment stuff has been awful only to ramp the market higher

Tue, 01/18/2011 - 09:50 | 883781 papaswamp
papaswamp's picture

Good is good and bad is good....think POMO

Tue, 01/18/2011 - 12:06 | 884109 HarryWanger
HarryWanger's picture

Any number above zero shows acceleration and expansion. A good report even if it missed expectations by a touch.

Tue, 01/18/2011 - 09:48 | 883777 DavidC
DavidC's picture

More anecdotal comment...

It's lunchtime here in the UK, I've just gone to our local fish and chip shop for a quick lunch. They have been running a number of offers over the last couple of months. I asked why today and they said it's because business is not good.

There is a baker a couple of doors away that has been there as long as I've lived in this area. It closed its doors a week or so ago. Chatting to the people in the chippy, it seems that the baker has closed due to lack of business.

Anecdotal? Yes. Indicative? Quite possibly.

Tue, 01/18/2011 - 09:50 | 883782 Bigger Dickus
Bigger Dickus's picture

The cubes are down -0.7% pre-market? What? Is this a glitch? Paper cubes decoupling from paper futures?

Tue, 01/18/2011 - 09:53 | 883785 JW n FL
JW n FL's picture

so the investment bankers... have luquidity to trade into nothingness (other than bonus monies)... but we can't Prop! UP! our own manufacturing at home... not enough lobby monies in it, i guess.

Tue, 01/18/2011 - 10:11 | 883808 mollowitz
mollowitz's picture

Over five thousand years ago, Moses said to the children of
Israel , "Pickup your shovels, mount your asses and camels, and I will lead you to the Promised Land."

Nearly 75 years ago, Franklin D. Roosevelt said, "Lay down your shovels, sit on your asses, and light up a Camel, this is the Promised Land."

Today, the Government has stolen your shovel, taxed your asses,raised the price of camels and mortgaged the Promised Land!

I was so depressed last night thinking about BP, Health Care
Plans, the economy, the wars, lost jobs, savings, Social Security,
retirement funds, etc . . . I called a Suicide Hotline. I had to press 1
for English.

   I was connected to a call center in Pakistan . I told them I was suicidal. They got excited and asked if I could drive a truck......

Tue, 01/18/2011 - 12:12 | 884128 JW n FL
JW n FL's picture

now that was funny...

Tue, 01/18/2011 - 10:24 | 883831 goldmiddelfinger
goldmiddelfinger's picture

CBOE equity put/call ratio EXTREEMLY Peaky!!-

Tue, 01/18/2011 - 10:32 | 883851 Oh regional Indian
Oh regional Indian's picture

What gets manufactured in NY state? As far back (yes, seems like ages) as 1996, when I was in school there, small and medium manufacturers were struggling to stay afloat. I doubt conditions have improved since.

More NUMBers anyways. Iiiiiii haaaave become, comfortably NUMBer.


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