Philly Fed, Yet Another Diffusion Index, Posts Highest Reading Since November 2007
The trend of polls beating expectations continues, while actual results indicate no real improvement. The latest indication of this comes from the Philly Fed current activity diffusion index, which skyrocketed from -7.5% to 4.2% as the market kept on ramping higher, while more employees were let go, and margins declined yet again.
From the release:
The region's manufacturing sector is showing some signs of stabilizing,
according to firms polled for this month's Business Outlook Survey.
Indexes for general activity, new orders, and shipments all registered
slightly positive readings this month. Although firms reported
continued declines in employment and work hours this month, losses were
not as widespread. Most of the survey's broad indicators of future
activity continued to suggest that the region's manufacturing
executives expect business activity to increase over the next six
When you have optimism, why care for the facts. As Abby Joseph Cohen noted dramatically, the market is sure to be at 1,100 soon, which should translate into absolutely nothing at all for the Philadelphia region's manufacturing sector, however optimism will keep rising until there is no output and no workers left.
The survey's broadest measure of manufacturing conditions, the
diffusion index of current activity, increased from -7.5 in July to 4.2
this month. This is the highest reading of the index since November
The percentage of firms reporting increases in activity (27 percent)
was slightly higher than the percentage reporting decreases (23
percent). Other broad indicators also suggested improvement. The
current new orders index edged six points higher, from -2.2 to 4.2,
also its highest reading since November 2007. The current shipments
index increased 10 points, to a slightly positive reading.
Labor market conditions remain weak. Firms continue to report declines
in employment and work hours, but overall job losses were not as large
this month. The current employment index increased from a weak reading
of -25.3 to -12.9, its highest level in 11 months. Twenty-three percent
of firms reported declines in employment this month, down from 30
percent in the previous month. Although the workweek index remained
negative, the index increased nine points, to -6.3.
Oh, and good luck passing on those higher input costs. Alas, Obama forgot to send consumers a $1,000 a week direct stimulus check so they can afford more at higher prices. But, aside from that, inflation should be a very optimistic read as well.
For the first time in 10 months, more firms reported higher input
prices than reported lower prices. The prices paid index rose 14
points, to a reading of 10.0, its first positive reading since last
October. The same manufacturers, however, reported near-steady prices
for their own final goods. Nearly 75 percent of the firms reported
steady prices this month, while 13 percent reported price decreases and
12 percent reported increases. The prices received index increased 20
points, from -21.5 to -1.5, its highest reading since last October.
So let's get this straight - steady prices for own final goods, higher input prices, reduced margins: this should certainly present a strong case for increased optimism, nevermind that the bottom line keeps shrinking as speculators drive input costs higher and higher, thanks to a plummeting dollar.