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Empire State Manufacturing Continues Plunging, Drops From 23.5 To 2.55 In November, 34.6 In September
Cash for Clunkers is long forgotten, and it is now time for another manufacturing stimulus: from 34.6 in September to 24.5 in October to a mere 2.55 most recently. Diffusion data suggested further contraction in margins, evaporation of optimism and an ongoing decline in inventories: the whole 5% of Q4 GDP is becoming a Liesmanian myth.
The Empire State Manufacturing Survey indicates that conditions for New
York manufacturers leveled off in December, following four months of
improvement. The general business conditions index fell 21 points, to
2.6. The indexes for new orders and shipments posted somewhat more
moderate declines but also moved close to zero. Input prices picked up
a bit, as the prices paid index rebounded to roughly its November
level; however, the prices received index moved further into negative
territory, suggesting that price increases are not being passed along.
Current employment indexes slipped back into negative territory. Future
indexes remained well above zero but signaled somewhat less widespread
optimism than in recent months. Indexes for expected prices paid and
received declined moderately but remained well above zero.
Take home here - Stimulus:More Optimism::No Stimulus:Less optimism.
Survey results on general conditions:
The general business conditions index fell from 23.5 to just 2.6,
suggesting a leveling off in conditions after four straight months of
improvement. Roughly 24 percent of those surveyed in December said that
conditions had improved, while 22 percent reported that conditions had
deteriorated. Most of the other specific activity measures fell a bit
less sharply: the new orders index slipped more than 14 points to 2.2,
and the shipments measure declined by just under 7 points to 6.3. The
unfilled orders index fell by more than 18 points to -21.1, its lowest
level in nine months. In contrast, the index for delivery times held
steady at -2.6, and the inventories index, at -18.4, was little changed
for the third straight month.
On Margins:
Manufacturers See Margins Squeezed Survey respondents
faced somewhat higher input prices in December, while their selling
prices declined. The prices paid index rose 9 points to 19.7, reversing
a drop of similar magnitude in November and suggesting some renewed
price pressures. At the same time, the prices received index slipped
6.6 points to -9.2, its lowest level since August. Employment indexes
declined for the second straight month, falling below zero for the
first time in a few months: the index for number of employees slipped 7
points to -5.3, and the average workweek index fell 11 points to -5.3.
Optimism is now gone:
Manufacturers remained generally optimistic about the outlook for
general business conditions and activity, although a bit less so than
in recent months. After rising to its highest level in more than a
year, the index for expected general business conditions retreated 14
points to 43.0—still a high level but the lowest since July. The
forward-looking indexes for both new orders and shipments fell by
almost as much but remained in the upper 30s, while the future unfilled
orders index declined by a more moderate 5 points to 12.0. The index
for expected delivery times edged up to zero, its highest level in more
than a year, and the measure for future inventories was unchanged at
7.9.
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New York will definitely be going all out to manufacture more municipal bonds, be assured of that. The State has already manufactured personal income tax increases, two tiers higher over the previous high of 6.85% for personal income (not including income tax for NYC).
The property tax rebate program called STAR has already been eliminated, which I view as a property tax increase. There has been an increase in the school portion of property taxes in my area and I suspect most other in the states as well. As NY runs out of money (ahem, this month) and school districts get their next installment, currently being sent out, they will find a 10% reduction in state aid. Look for more property tax increases in NY in 2010 big time.
Chuck Schumer and Barney Frank likely to team up in 2010 to provide federal guarantees. If this happens, the republic is dead.
My purpose is not to be NY centric (believe me, it is nothing to be proud of anymore at all) but to share with ZH readers what is on the ground in NY just as we probe the shenanigans in Cali, Mich, Illionois, Florida, etcetera.
Mr Santelli needs a follow up post on here after that CNBC "debate" !
:-)
I second that motion
Here's the onair "debate"....
http://www.cnbc.com/id/15840232?video=1359408557&play=1
Debate? Misnomer! I would think that PETA would be all over Mr. Santelli for what he did to poor Mr. LIESman.
Combined with a roaring PPI = stagflation. Unlikely these producers can pass these costs to consumers. Margins getting squeezed and multiples will soon contract.
Empire is highly volatile but even with the PPI elevated I think deflation is still the #1 concern. Bond markets have it right again. John Williams timing is off.
one word - STAGFLATION
Some of this might pass through to the CPI but it will be short lived. Any inflation will just kill whatever demand is left and prices will decline. I would guess the fed would rather have stagflation over deflation but I just don't see any sustained INflation with so many people out of work.
Wait until the holiday season retail figures come in and see what that does to optimism.
Unless the government lies again.
Their previous retail spending figures have been blatant lies contradicted by their own figures. They have repeatedly shown retail spending rising while unemployment rises, savings rates rise, wages fall or are flat and consumer credit falls. Since there is no other source of money for the supposed increase, the only solution is that the retail sales figures themselves are a lie or the country has been inundated with so many foreign tourists that their shopping has moved the national retail figures.
I know which answer I find more plausible.
I expect them to lie again again about retail sales, which will be again obvious when you check the other figures on all the possible sources of money that could have been spent and find it didn't move the same way
Most of November retail sales was gasoline and deeply discounted electronics. Yeah, gasoline. Like people driving for Thanksgiving. Hilarious.
Even if its gasoline the money has to come from somewhere.
Its either earned, borrowed or drawn from savings. If earnings are down, savings are up and borrowing is down the increases in retail sales that the government has posted several times are simply *impossible* unless there's a fourth source of money I haven't thought of.
I've just thought of a fourth source of the money; people borrowing on credit cards then defaulting. They spend the money on the card generating retail sales, then the defaults show up as a reduction in consumer borrowing.
the money is coming from those who are strategically defaulting on their mortgages. Somehow, they have found an extra $2 - 3K per month in their pockets.
The Fed engineered recovery: Higher energy prices and manufacturing in the toilet.
well said.
i'm sure the average american as well as the average small business owner appreciates the huge increase in energy costs. that'll help things nicely.
i might remind my Dow Theory friends that the latest high in the transports should be viewed with a skeptical eye.........anecdotally, article on b'berg this morning warning of horrible losses in the airline sector in 2010 due to energy prices.
Not just energy prices but all input prices that are manipulated by speculators.
Small and medium sized businesses can't handle huge swings in their input prices so when speculators start playing with them it results in countless perfectly viable businesses going under for no other reason than that speculators were gambling on the commodities that formed their inputs.
Its a major negative for any economy and that kind of speculation has to be stopped completely to prevent them continuing to destroy real businesses
Ahh..the lowly preposition. Spin or honest error - ya just never really know.
CNBS: The New York Fed's "Empire State" general business conditions index fell 2.55 in December from 23.51 in November.
Bloomie: The Federal Reserve Bank of New York’s general economic index fell to 2.6 from 23.5 in November, the bank said today.
I noticed that as well. In both the article and the headline number...
Steve Leisman, your thoughts? A**hole.
Watch the drop in BBY get bought with both hands today....
LOL....
It's still trading below the open. I'm thinkin' put a fork in it until support area around 38.
You may want to look at:
FRE
FNM
(LMFAO)
Next time Leisman mentions paying back TARP money, someone needs to remind him of all the FDIC backed bonds all these banks have sold, at rates way lower than they would have borrowed at without the backing of the US Govt.
"Liesmanian" myth. That's f-ing priceless, Tyler.
Coined!
As if on cue, data supports John William's thesis of the coming hyperinflationary depression. Divergence in prices paid/received amplified markedly. Very little wiggle room for not only manufacturers but consumers as well as eneregy costs and other core goods keep rising in a '70s style meltup (Sheik Yerbouti, yeah yeah for the literati).This is awful news for the coming wave of macro reports and has NY-specific implications as well due to impeding higher taxes across the board (Manhattan coop owners, all together now, scream!). Gold implications? I'm predicting a gold rerurgence big time as the alchemy is PLUperfect: rising prices everywhere, rising anxiety in financials, currency schizophrenia, incoming liquidity tsunami.