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Dallas Fed Survey Crashes To June 2009 Lows, Warns "It Is Getting Ugly"
After a Q1 collapse, the Dallas Fed Manufacturing Outlook managed a bounce for a few months (though never got back above zero). It appears, Dallas Fed's aptly-named 'Dick' Fischer was entirely wrong when he progonosticated that "on net, low oil prices are good for Texas." December's Dallas Fed print crashed to -20.1 (from -4.9) massively missing expectations of -7.0 and back at the lows not seen since June 2009.
Dallas Fed is in contraction for the 12th month in a row...
New Orders crashed, Prices Paid and Received plunged, Order growth rates tumbled...
And perhaps most worrisome, "hope" turned negative.
Respondents added:
"The price of oil is really impacting our customer base and, in turn, purchases of our product. It is getting ugly."
There are lots of contradictions in the marketplace. As an offshore oil service provider, we have had very strong orders for the last five months, which is bizarre. We continue to read about doom and gloom, but the numbers haven't borne that out. Living in Houston, I continue to see multiple out-of-state license plates on the freeways. People are continuing to pour into Houston; I just don't know what they’re doing.
Oil and gas work has significantly slowed. There is pressure from customers to lower prices further.
The full Dallas Fed responses below:
Fabricated Metal Product Manufacturing
- Much of our work comes from petrochemical and midstream owners and contractors. Although our backlog and December work have improved, capital expenditures going out are being reduced by our customers. We have increased some capital expenditures plans in the last quarter, anticipating passage of Section 179 extensions, but Congress' waiting until year-end has been problematic since we cannot do anything significant without actual passage.
- New Environmental Protection Agency regulations on wood-burning furnaces set to take effect Jan. 1, 2016, have decreased orders and will continue to do so throughout the winter months.
- We first saw an increase of orders due to the end of the year, per usual. We are now seeing a continued surge of orders moving into the new year.
- The crude oil and natural gas market price downturn continues to negatively impact our industry and our company. Labor costs remain stable, but the producers of our primary raw material, hot rolled coil steel, have announced price increases effective first quarter of 2016, which the finished goods market will not absorb due to highly competitive pricing, thus further compressing our margins.
- The price of oil is really impacting our customer base and, in turn, purchases of our product. It is getting ugly.
- The Architecture Billings Index mixed-practice index slipped below 50 about nine months ago, which historically would foreshadow a slowdown in booking new work, which we are experiencing. We expect this will likely mean we will experience a slowdown in shipments in our fiscal second quarter (February–April). We are forecasting 2016 low-rise nonresidential construction starts measured in square feet to grow at 4 to 5 percent, which is our expected growth rate for our business.
Machinery Manufacturing
- There are lots of contradictions in the marketplace. As an offshore oil service provider, we have had very strong orders for the last five months, which is bizarre. We continue to read about doom and gloom, but the numbers haven't borne that out. Living in Houston, I continue to see multiple out-of-state license plates on the freeways. People are continuing to pour into Houston; I just don't know what they’re doing.
- The oil industry continues to suffer. We will end the year with less debt and more backlog because we have diversified out of the oil patch and out of Houston.
- Weak oil and natural gas prices are having a material adverse effect on our business.
- Several of our customers have slowed down for different reasons that do not appear to be related to a general slowdown in the economy.
Computer and Electronic Product Manufacturing
- Expectations for 2016 and midterm (the next three to five years) are for a low-growth environment.
Transportation Equipment Manufacturing
- Oil and gas work has significantly slowed. There is pressure from customers to lower prices further. We haven’t had any feedback provided from customers with regard to future expectations.
Food Manufacturing
- The strong dollar and overall weak Latin American economies are impacting our export business. Domestic demand is strong, base raw material costs are steady to down, and energy costs are reasonable. 2016 looks good.
Paper Manufacturing
- We have had a very slow December. Our outlook for first quarter 2016 is cautiously guarded.
- Several of our large automotive customers shut down their plants for part of December, so our production is naturally down compared to other months. Also, during recent months, we have increased our entry-level wages and increased the pay of existing employees as part of our efforts to reduce employee turnover.
- The business cycle will pick up in the new year.
Printing and Related Support Activities
- It is hard to see what six months away looks like at this point; we need an infusion of new customers to make it look any better. The fourth quarter has been much softer than anticipated. We lost a chunk of work. We had to raise starting pay for trainees just to get qualified folks in the door. Price-reduction pressure from key customers continues, squeezing margins further.
- We often get busy this time of year, and this December has been like that—not really seasonal, just a busy time of year for us. We are very concerned about lower activity levels and what that will do for business in the upcoming six months.
Miscellaneous Manufacturing
- The new tax changes in December will improve our capital expenditures, and new-product introductions in the next six months will increase sales and productivity.
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I'm waiting until Mrs. Cog tells me to panic.
<Wait, what did you say honey?>
No need to panic. As soon as the weather improves, so will the numbers.
Considering it was nearly 70 degrees F on Christmas Day, what more could be 'improved'? :-)
Well these charts tell me nothing as the one thing other than fiat that you can whip up from nothing is hope. Forward!
Well it makes perfect sense to raise rates again and again. Janet you dumb fucking miserable excuse for a human
If you happen to own a ski resort, plenty.
Panic is a lot of work. It's much easier to set up a lawn chair on the Shit river next to Toilet falls and watch the fun. Texas is going to be hurting, though it could be a lot worse. It's all those states that have been taken over by the butt-hurt brigade of adult two year olds where the pain will be worst.......
The economy is b00ming!
Lower oil prices and the loss of thousands of jobs in energy hubs such as Houston and Lubbock are pinching consumer discretionary spending in Texas, with weakness being noted in the third-quarter earnings of companies in such areas as hotels, restaurants and auto sales.
http://www.cnbc.com/2015/11/11/texas-jobs-consumer-economy-feel-the-low-...
Better speed up the rate hikes Janet, this eCONomy is really starting to overheat.
I'm just glad this is only affecting manufacturing, which we no longer do much of in the US. Otherwise this could be problematic for the price of my stawks.
Who am I kidding? Nothing can affect the price of my stawks.
"I'm just glad this is only affecting manufacturing, which we no longer do much of in the US"
Wait, at one point weren't they lumping fast food joints under that category? After all they were assembling burgers.....
One see the bars, the Fed sees the stars.
One more rate hike will fix the economy.
NIRP, here we come.
This is proof the "recovery summer" has arrived.
don't let those facts make you a debbie downer
We at the Fraudural Reserve blame it 100% on the weather. No other factors could be causing this slight dip in the "recovery".
We are monitoring things closely though, so don't worry. If markets drop a percent, we will cut rates a commensurate one percent.
Jump you fucking banksters, JUMP!!!!
The quotes actually don't sound that bad. A lot of "it's a mixed bag" - which has been true for about 6 years now.
mixed barf bag
And the oil debt tsunami has yet to hit, but near.
It's like a tidal wave still in open ocean. Won't see it until the liquidity becomes a bit more shallow.
There will be growth in the spring! [/Chance the Gardener]
Only if the roots are strong....................... I like to watch
I must be sick i want the market to correct. Guess that makes me a bad person
What was the message, Mr. Gardner?
"Now get this, Honky. You tell Rafael that I ain't taking no jive from no Western Union messenger. You tell that asshole... if he got something to tell me... to get his ass down here himself.
Then he said that I was to get my white ass out of there quick... or he'd cut it."
What goes down must go up. No worries. /s
THey are still lying like crazy:
This is totally fabricated BULLSHIT. Its so BIZARRE cause its a effing LIE!
Machinery Manufacturing
This is another WHOPPER. I have worked in this industry for 35 years and it is as bad as I have seen it. Rampant discounting and high markdown sales ARE NOT indicative of strong business. Not to mention the Restaurant biz is off IMO between 8-10%. Over the Christmas season its been extra suckey. Obummer care is sucking the life out of this sector with its +15% YOY insurance increases.
Food Manufacturing
Just need to retrain all those wildcatters to work in a telemarketing phone center....there fixed!
OK, I need a lesson in Basic Chartology 101.
I like tracking CapEx as a forward-looking indicator. On the chart, they show the indicator directions as "increasing". Hmmm. The Nov (2.1) to Dec (1.7) index shows a drop of -0.4. Percent reporting an increase is 16.4, while 68.9 see no change and 14.7 see lowering. So with 83.6% of reporting businesses expecting no change or lowering CapEx, how can the indicator direction be towards "increasing"?
Since landing in FLA in November, swear the whole fcking country is moving down here. Traffic, INSANE!
Reason: heat bills and housing costs too damn high in the tri-state area, and no jobs to support the expenses. So, folks left no choice but to buy them trailers and burned-out foreclosures down in FLA.
But since we don't consider housing and energy costs in our inflation numbers, inflation is looking pretty tame. Mission accomplished.
Thank your Fed, and keep the faith in FIAT, because it is all you have left.
Here are some more signs of a coming recession.
1. Investors in high-yield bonds are expecting to see their first negative return since the start of the credit crisis in 2008.
http://www.marketwatch.com/story/deteriorating-junk-bonds-flash-warning-signs-for-stocks-2015-12-07?dist=afterbell
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Iron ore prices tumble
http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30
6. Baltic dry shipping index tumbles
http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
Everything is quote on quote: “Transitionary” or “Slack” at the FED:
– Low oil prices? Transitionary.
– Low copper prices? Transitionary.
– Low iron ore prices? Transitionary.
– Lower Capex and Deflation? Transitionary.
– Ultra low Baltic Dry Index? Transitionary.
– 62.5% participation rate? Slack.
– 95 million Americans NOT in labor force? Slack.
Eat lead, transitionary slackers! https://www.youtube.com/watch?v=yfSt693Ev0w