Empire Fed Misses, Prints Negative For Fifth Consecutive Month, Hopium Rise Continues

Tyler Durden's picture

Whereas last month's negative print in the Empire Fed index (which beat expectations), was attributed to Sandy, it will be difficult to see what attribute can be blamed for this month's major miss, in which the NY Fed just disclosed a -8.1 General Business Conditions update, down from -5.22, and below expectations of -1. This was the fifth consecutive month in which the index has printed negative, and the 6th miss of the past 9 reports. The new orders index dropped to -3.7 from +3.08, while the shipments index declined six points to 8.8. At 16.1, the prices paid index indicated that input prices continued to rise at a moderate pace, while the prices received index fell five points to 1.1, suggesting that selling prices were flat. Bad news for anyone that needs positive margins (i.e. everyone). But that's ok, because the Hopium index, i.e., the Six Month Ahead index, which is the only thing those who fail to see what Bernanke's just announced $1 trillion injection means for the economy have to fall back on, rose from 12.88 to 18.66. So it is all about the future, forget the present, but whatever you do, don't look at the forward Prices Paid indicator which soared to 52, the highest since May: surely NY corporations are optimistic due to the fact that they can now kiss margins goodbye for at least half a year.

Behold the hopium: 6 month forward New Orders:

And Prices Paid:

The blended diffusion index shows a coordinated US slowdown is imminent, government data massaging and manipulation notwithstanding:

From the report:

Continuing a fi ve-month streak of negative readings, the general business conditions index fell three points to -8.1—a sign that business activity declined at a modest pace for New York manufacturers in December. Fifteen percent of respondents reported that conditions had improved over the month, while 23 percent reported that conditions had worsened. After rising above zero last month, the new orders index fell seven points to -3.7, pointing to a small decline in the demand for manufactured goods. The shipments index gave back some of its gains from last month, declining six points to 8.8—evidence that shipments rose at a slower pace than in November. The unfilled orders index climbed five points to -6.5. The delivery  time index was little changed at -2.2. The inventories index was also similar to last month’s reading and, at -11.8, indicated that inventory levels were somewhat lower.

Labor conditions:

The prices paid index inched up two points to 16.1, suggesting that input price increases remained moderate in December. The prices received index fell five points to 1.1, indicating that selling prices were generally fl at over the month. Employment indexes, negative for a second consecutive month, pointed to weaker labor market conditions. The index for number of employees rose fi ve points to -9.7, while the average workweek index declined three points to -10.8.

Kiss your margins goodbye:

In a series of supplementary questions, firms were asked about past and expected price changes overall and in a number of categories. In general,  respondents predicted that prices paid for most budget categories would increase by about the same rate in calendar 2013 as in 2012. The steepest price increases—both actual and expected—were reported for employee benefits, up 6.4 percent, on average, in 2012 and expected to be up 7.2 percent in 2013. Respondents were also asked how they expected their selling prices to change over the next year. The average expected increase in the current survey was 1.0 percent— down from 1.8 percent in last year’s survey and 3.2 percent in the December 2010 survey. Manufacturers were also asked about superstorm Sandy’s recent and expected effects on revenues: Downstate establishments estimated that revenues in October and November were 7 percent and 5 percent lower, respectively, than they otherwise would have been.

Full report here.