Philly Fed Surges To Highest Since March 2011, Sends S&P To Record Intraday High

When we reported on the Initial Claims print we said that "we will have to see the Philly Fed today, where we expect either a huge beat or huge miss to both be catalysts for fresh all time market highs." Well, we just got the all time highs, first in the DJIA for moments ago in the S&P cash as well, following news that the Philly Fed soared from 12.5 to 19.8, slamming expectations of a modest decline to 8.0, and despite a drop in New Orders from 16.6 to 10.2, and a crash in Inventories from -6.6 to -21.6, the headline print coming at the highest since March 2011.

From the report:

Indicators Suggest Pickup in Activity

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 12.5 in June to 19.8, its highest reading since March 2011 (see Chart). The percentage of firms reporting  increased activity this month (37 percent) was greater than the percentage reporting decreased activity (17 percent).

Other current indicators suggest continued growth this month. The shipments index increased notably, from 4.1 in June to 14.3. The demand for manufactured goods as measured by the current new orders index remained positive, although it fell back 6 points to 10.2. Firms reported a drawdown of inventories this month: The inventory index fell 15 points, from -6.6 to -21.6.

Labor market conditions showed a notable improvement this month. The current employment index, at 7.7, registered its first positive reading in four months. The percentage of firms reporting increases in employment (18 percent) exceeded the percentage reporting decreases (10 percent). Firms also indicated an increase in the average workweek compared with June.

Price Indexes Suggest Moderate Pressures

With regard to purchased inputs, 29 percent of firms reported paying higher prices for inputs, while 8 percent reported lower input prices. The prices paid index edged down 1 point. The prices received index, reflecting firms’ own manufactured goods prices, decreased 8 points, to 7.0. Over 14 percent of the firms reported higher prices for their own manufactured goods, while 7 percent reported lower prices. Nearly 76 percent reported steady prices for their own products.

For the Taper Trackers, the Number of Employees index soared from
-5.4 (which however was completely meaningless in last month's NFP
number) to 7.7, confirming that the September taper date is now pretty
much assured, if there was any doubt before.

Finally, corporate
margins resume their squeeze with the Prices Received less Prices Paid
spread deteriorating from -7.9 to -14.5. However this is the new normal,
where fundamentals haven't mattered in years so we will just skip this.