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Empire State Manufacturing Survey Comes In At 19.1, 40% Drop From April: Restocking Over, Margins Increasingly Squeezed
The May Empire Manufacturing Survey came in at 19.1, a huge miss to expectations of a 30 read, and a 40% from the April read of 31.9. Virtually all components of the index posted a deterioration, including Shipments, Unfilled Orders, Delivery Time, with notable declines in Inventories (restocking is over) and the Average Employee Workweek. The one subcomponent which did increase was Price Paid, even as Prices Received contracted once again. Manufacturing margins are now openly getting squeezed. The result of this disappointing read was enough to knock out the wind out of the mysterious rerisk fervor that started at around 3 am, when the first employees at Liberty 33 started showing up at their Bloomberg terminals.
From the survey:
The Empire State Manufacturing Survey indicates that
conditions for New York manufacturers continued to improve for a tenth
consecutive month in May, albeit at a slower pace than in April. The
general business conditions index fell 13 points, to 19.1. Similarly,
the new orders and shipments indexes also moved lower but remained at
positive levels. The inventories index dropped back to a level near
zero after rising into positive territory in March and April. The
prices paid index continued to climb, reaching its highest level of the
year, while the prices received index was little changed and positive.
The index for number of employees rose for a fifth consecutive month,
reaching its highest level since 2004. Future indexes suggest that
activity is expected to expand further in the months ahead, but the
level of optimism was noticeably lower in May than in recent months.
And here is Goldman with the damage control. Goldman, which previously pimps the Empire Survey at every chance it can when it beats estimates, now says "This is just the first survey for May, and from a state that is not
known for its concentration in manufacturing. We will therefore be
looking to other regional surveys." The spin just refuses to die.
Modulation (to Still Solid Growth) After Inventories Begin to Accumulate
BOTTOM LINE: Empire index suggests modulation in industrial surge following signs of inventory accumulation. That said, the index - at 19.11 in May - is still solidly in growth territory, as is its employment component (22.37).KEY NUMBERS:
Empire index +19.11 in May vs. median forecast +30.MAIN POINTS:
1. The 11.7-point drop reported for the headline index implies significant slowing of factory growth momentum in New York State, though the level of this index is still solidly in growth territory. The details support the headline as the index of new orders drops more than 15 points (to 14.30 from 29.49), the index of shipments tumbles almost 21 points (to 11.29 from 32.10), and the inventories index sheds about 10 points (to 1.32 from 11.39). The pattern is one of modulating the rise in production as inventories begin to accumulate, albeit with smaller productivity gains as the index of employment rises nearly 2 points to 22.37.
2. This is just the first survey for May, and from a state that is not known for its concentration in manufacturing. We will therefore be looking to other regional surveys -- the next is from the Philadelphia Fed on Thursday -- to see whether this suggestion that growth in factory output is moderating following signs of inventory accumulation holds up. Expectations for the Philadelphia report are essentially like those that preceded this one -- roughly unchanged at a strong pace (expecting 21.6 for the Philly Fed's May index following a 20.2 reading for April).
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Repost from a different thread: Is the Empire State Manufacturing Survey like the Chicago PMI where it's released to subscribers before it's released to the general public? Futures sure took a dive a few minutes before it was released...
EVERYBODY gets these reports before the general public, regardless whether it is subscription or not. Do we even have to ask questions like this anymore?
With the Chicago PMI, they clearly state that the data is released to subscribers 3 minutes prior to public release. I was just wondering if the Empire State MS has a similar policy?
Sorry, my blood pressure got the best of me. I have no idea.
And missed expectations of 30. Man, you are a Romer pimp.
"Romer pimp"
That would have to be one of the world's toughest jobs.
Man...they delete Harry's comment and I got junked. What the Hell? ;)
Go long, Harry. Bet the farm.
Popo says "Here kitty kitty. Come see Popo. Nice kitty, let me give you a big hug."
Sacrifice:- To make sacred.
He's going to have to bleed sweat blood to do this one justice.
What color is the sky in your world, Harry?
What's your max pain threshold for minimum growth?
It is amazing the number of people in America today, that cannot read the signs of hyperinflation that is about to rear its ugly head. Hope you got Gold and Silver. Of course Harry, is still as lost as ever.
Then, pray tell, WHY are S&P futures UP right now, 20 min. before opening??
positioning
It's Monday.
When all else fails, just hit the Dollar.
Got to get the mkt up there for the mutual funds to buy it. Its monday morning.
Actually, this is totally and completely irrelevant to those of us in the S&P casino. There are no clocks on the walls and the windows are smoked glass. No experienced speculator/gambler/"investor" cares about the colour of his chips.
Mr.Bernanke FORCED us to come in here...!
Whoops. That's a miss and then some. Someone take that Roundup away from Tyler, he's killing the green shoots again by posting reality.
Clearly, the green shoots are Roundup Ready.
Did someone call my name? No? I was sure someone did...oh well.
The green shoots have been genetically engineered by Goldman and company to be "Roundup Resistant" in the same manner that many grains have been developed to tolerate the chemical (Roundup) that's sprayed on the fields to kill the weeds.
God bless Blankfien. He really is doing God's work now that he's gene splicing the economy.
Roundup Ready® Soybean varieties contain in-plant tolerance to Roundup® agricultural herbicides. This means you can spray Roundup agricultural herbicides in-crop from emergence through flowering for unsurpassed weed control, proven crop safety and maximum yield potential.
http://www.monsanto.com/monsanto/ag_products/input_traits/products/round...
manufacturing?? ya like that's relevant anymore
You wanna short some euros? Kill some more your own industry, Americans?
Keep in mind ...
to be a manufacturer in NY State in this day and age means you are a total fecking idiot... or are sucking from the public teet through tax credits.
The bump in this index in previous months was NOT a leading indicator, it was Pavlovian response by the last bunch of morons to leave a sinking ship following the Big Recovery Lie they heard on the TV.
If any manufacturer in NY State is reading this and preparing to flame me, I can provide you with a list of over 50 sites in the Southeast that will give you FREE land, 5 to 30 year tax exemptions, tax credits for hiring, no unions, much less regulation, and better transportation hubs once the Heartland rail route is finished....
As you might have noticed by now, I firmly believe the Empire Manufacturing Index is totally worthless. NY is in the process of de-industrialization on a rapid and near permanent end. Not until the cost of hiring labor and regulatory hurdles drops to reasonable levels will NY State ever matter again to the national or worldwide manufacturing statistics.
I also can pull up a list of about a hundred former manufacturing facilities for sale Upstate NY if anyone is interested.
It will come back at least partially but only after this out of control bullshit speculation collapses everything and Wall Street punks find themselves unemployed or worse...
Wall St. punks were supposed to be unemployed, but their minions in the gubbie gave them your money to make sure it did not happen. So I would reckon that you will not be back.
+1
Which state would be more useful?
Hopefully one away from the path of oily hurricanes. Or put out some tarps and set up shop refining locally.
LOL
God that just brings all kinds of images to mind.
Some poor family needs to flee from the oncoming hurricane but there's no gas for the car. Grandpa's out back running the still while Jr. gathers oily Gulf of Mexico water that's falling right now onto black and blue tarps spread all over the place, all of which are connected by a system of plastic pipe ripped out of the 20 abandoned homes all around the neighborhood.
Will the family die in the hurricane? Will Jr collect enough oily water to make the 5 gallons of gas needed to make in safely inland? With Grandpa blow everyone up when the still reaches 800 degree F? Tune in next week to find out.
As so on. I have a fertile imagination.
You the man.
Anyone who has been around upstate knows what a wasteland it is. Those people are just waiting to die... I guess there are some farms - but I'll never forget all the abandoned factories.
LOL. i got fam up there. if you don't work for the state or have a dairy or organic veggie farm you really are just waiting to die.
none of this data matters right now -- it's all about the Dollar (or the euro) -- Dollar strong, markets down. Dollar weaker, markets up in USA
it may be even simpler than that... are the HFT bots "providing liquidty" ?
Even though this is a 'survey' it will have to corroberate with the Philly this Friday...we'll see. Still a bad number.
Harry, just pull your head out of the sand, after last week's volatility passed over?
ANOTHER victim of the Double Whammy economy:
"The prices paid index continued to climb, reaching its highest level of the year, while the prices received index was little changed and positive"
Margins squeezed by simultaneously inflating costs in a deflating economy.
Just like consumers getting squeezed between competing forces of INflating cost of living with DEflating incomes, employment levels, real assets and retirement assets.
How did we get to such a pretty pass in the economy? How did we engineer a previously unidentified simultaneously inflating and deflating enviornment which was hitherto considered an economic impossibility?
This is a direct result of the "Grand Economic Bazooka" deployed since 2008 overlaid on the prior Grand Wizard Experiment of 30 years of supply-side/trickle down/ goldilox engineering (or how to maintain an economy that only values shopping, not creating).
In an overly engineered economy that relies more on finegaling with figures and finance than actually making anything, massive dislocations can occur.
We're deflating from the after effects of a 30 year bubble. That is, 30 years of deficit spending deployed into the FIRE sector, ending in the housing bubble that we all know.
We're inflating because of money printing and globalization which drives up the cost of raw materials, energy, global security, and most of the critical cost inputs that then trickle into the economy.
+1. Great post.
HarryWanger and the "dead parrot" economy-
http://www.youtube.com/watch?v=npjOSLCR2hE
It's not dead, it's pining for the Fjords! :)
Weird...no one knows anything as the desperate, terrified herd runs first this way, sees another tiger, then that way, straight into a lion, then off a cliff...dollar is DOWN now, gold has moved up again, the S&P gains look to be transitory as reality sets in and...and...
You think thats weird, try trading the DAX these days.
Manufacturing margins are now openly getting squeezed.
Yes, this is the result of increased "liquidity". Nice job Fed.
Actually it's MUCH MUCH worse. When I said that there would be a severe consumer retrenchment in may. I meant severe. Like freak the tax collectors right the hell out severe.
Traveling home from Chicago. If there were any doubts about the consumer, I saw nothing but crowds at restaurants and shopping. I travel there quite often but this was one of the busiest times I can remember in a long time.
As I said above, while the reading missed expectations, it was still very strong. After what I witnessed in SF and Chicago these past two weeks has been nothing short of an amazing economic turnaround.
You're really cute, Harry, really.
Those consumers can be properly understood as people with "consumption..." hopefully their iPads will be able to soak up all the blood they'll be coughing up soon. People buying stuff is unimpressive.
Show me the capital investment!
....Besides anecdotal arguments.
The health of an economic recovery is not measured at it's cores, you traveling from O'Hare to the Loop, or SFO to wherever. It is measured at it's margins, such as the huge swathes of empty storefronts in south and southwest Chicago, or almost all of Oakland and much of the area south of Burlingame.
Anyway, I still think you are a alt account troll. Otherwise, try to find a better hobby in life....
Harry Wanger....the roaming gnome troll
You should write for Newsweek.
There were also crowds in Chicago restaurants and stores during 2008 and 2009; it's a big city with lots of people. Also, I am not sure where you were, but people who live in the gold coast, Lincoln Park, or the Loop are not necessarily a representative demographic of our nation as a whole.
Chicago and SF are twin epicenters of liberalism in this country. Its not surprising in our current Keynesian-fueled implosion that towns like these might be some of the last to fall down due to the sheer amounts of pork and transfer payments coming in. Meanwhile, the industrial core of America is being hollowed out at an ever-increasing pace.
So, the Rod Blagoiavichs and Nancy Pelosis are still able to dine at fancy restaurants, for now. Harry Wanger's brethren to be sure...
Gee, Harry. Then how come the Dow is off 142.54 on mutual fund Monday? Maybe the sellers must eat at different restaurants.
I saw a guest on CNBC worldwide exchange this morning say "Manufacturing is ON FIRE..!!" in his best Harry Wanger voice... But as this report indicates, the CNBC contributor may be close to the truth for once... Technically speaking "going down in flames" is a form of being on fire...
I would like to nominate Harry for the 2010 Baghdad Bob Awards.