Despite Two Thirds Of Components Declining, Empire Fed Prints At Highest Since June 2010

Tyler Durden's picture

Chalk this one to "seasonal adjustments" or something, cause we no longer have any clue what is going on with the data fudging in America. When it comes to banana republic economic indicators the US is rapidly eclipsing China - case in point the Empire State Manufacturing Survey, which despite seeing the majority, or 6 out of 9 sub indices, declining in February, managed to not only rise, but beat the highest Wall Street estimate, printing at 19.53, the highest since June 2010, on expectations of 15.00, and compared to a previous print of 13.48. What lead to this epic surge? Why nothing short of a decline in just about two thirds of the components: New Orders declined from 21.69 to 22.79, Unfilled Orders declined from -5.49 to -7.06; Inventories declined from 6.59 to -4.71, Prices Paid declined from 26.37 to 25.88; Prices received declined from 23.08 to 15.29, and Number of Employees declined from 12.09 to 11.76. What increased? Shipments, Average Employee Workweek, and, drumroll, Delivery Times. And somehow this disaster of a report is supposed to bring peace and comfort to the market that things are getting better? Perhaps at the Fed's data manipulation department. And just like a 2.9 million seasonal NFP adjustment in January has resulted in an ebullient market tone, we wonder just how high 3 out of 9 subindices improving will send the market today?

Here is the spin direct from the source:

The general business conditions index rose six points in February to 19.5, its highest level since June 2010. The index was last negative in October, then rose to a level of around zero in November; subsequently, the readings have become increasingly positive, suggesting that the expansion in business activity for New York manufacturers has gained momentum in recent months. The new orders index fell four points to 9.7, indicating that orders climbed at a slower pace. The shipments index held steady at 22.8. The unfi lled orders index inched down two points to -7.1, and the delivery time index rose four points to 1.2. After climbing above zero last month, the inventories index  fell eleven points to -4.7; the return to negative territory indicated that inventory levels were slightly lower.

And yet despite all the fudging, expectations somehow declined:

Six-Month Outlook Remains Upbeat


Indexes for the six-month outlook, while somewhat lower than last month, conveyed a widespread expectation that conditions would improve in the months ahead. The future general business conditions index fell four points to 50.4, with 58 percent of respondents  expecting conditions to improve over the next six months and 7 percent expecting conditions to worsen. The future new orders and shipments indexes also declined, but remained at high levels. The future prices paid index advanced nine points to 62.4, indicating that  input prices  were expected to rise signifi cantly. The future prices received index climbed three points to 34.1. Future employment indexes suggested that fi rms foresaw an increase in employment. The capital spending index rose six points to 31.8, its highest level in a year, and  the technology spending index held steady at 18.8

Full paperweight here.

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Manthong's picture

"Fudging" ... yes.

Packing misleading meaning into statistics.

slaughterer's picture

We will live in a Joe Lavorgna / USSA world from here on to November.  

Don Birnam's picture

"Chalk this one to 'seasonal adjustments' or something, cause we no longer have any clue what is going on with the data fudging in America. When it comes to banana republic economic indicators the US is rapidly eclipsing China..."

Consider who presides as Head of Government; as such, the answer can be found in a quote by Sean Connery from "The Untouchables:"

"That's the Chicago way."

The Big Ching-aso's picture



"How many fingers, Winston?"

Don Birnam's picture

"How can I help seeing what is in front of my eyes ? Two and two are four."

"Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane." 

TruthInSunshine's picture

It's incredible how thick the manipulation runs and how purposefully deceitful the absolutely gangster criminals in the media, Federal Reseve, BLS and the sell-side shysters of Wall Street are allowed to be (I'm all for freedom; I'm all against the total and limitless intentional misleading of people by literal racketeers who are positioned to profit off the lies - many of them immune *cough-Congressmembers*cough).

Oh well. Thrice bitten is going to be an excruciating event for anyone at the poker table who doesn't realize who the fool is.

mac768's picture

"You can fool most of the people most of the time, but not all of the people all of the time"


The awakening will be crude...

Sean7k's picture

I want what they're smoking.

Cdad's picture

Lol.  It just keeps getting worse...and by "it" I mean everything.  Credibility is dead.  Thank you, Ben Bernanke, for the wasteland.

In the meantime, Porfolio Managers that have been raw doggin' on the long side of things for three months, they are grabbing themselves up a sweet deal on VIX futures, a deal created by utter nonsense...this as The Street embraces the concept of an "organized default" in Greece, or what used to be known as a "soft reprofiling"...carried on the backs of the winged unicorn of a rumored China bailout of the entire continent of Europe.

You cannot write this stuff.

Dick Darlington's picture

Better than expected headline is all that matters to the momo's. Sad but true.

Forgiven's picture

There's no business like show business!


(Heard behind the wizards curtain)

Print whatever you effing like guys, the party's over!

AU5K's picture

isn't inventories falling actually a positive though?  so its 5 out of 9, not 6.  still, doesnt make sense.

WonderDawg's picture

Inventories falling is positive, unless inventories are rising. If inventories are rising, that's positive.

Everybodys All American's picture

Chicago politics at it's finest.

DormRoom's picture

I guess all US stats are now adjusted to the Hopium curve.

Alex Kintner's picture

Yes Paul Krugman was born in 19.53. Now Pull My Finger.

SheepDog-One's picture

Well isn't THAT special.

Cognitive Dissonance's picture

Do you believe in Magic?

unrulian's picture

negative data is is the currency of terrorists...thinking the US is broke is terrorism...shorting aapl is terrorism (and stupid)...growing a few potatoes is terrorism...this post is asshats are all terrorists... ________ is terrorism....

dracos_ghost's picture

Short hedgies have gone back into hibernation like the groundhog. This market is like a freight train. It's not going to stop until it hits something.

Ahwooga's picture

I agree, although it does hit something almost every day. Nothing yet big enough to derail it but it must be getting pretty badly damaged up front. I cannot believe that 5900 is now a floor in the FTSE. Astonishing.

SheepDog-One's picture

It will hit the big obstacle planned to derail it one morning soon. This level of total insanity points to the fact that everyone knows they have to keep it going just a BIT longer and they dont need to worry, its the perfect out for all of them.

Village Smithy's picture

'Tis very scary indeed. There are very few "investors" in this market. Bernanke thinks he's done a great job of bringing money back to the equity markets but it's all fast money. It will be pulled out so fast this time I think we will have multiple limit down/circuit breaker  days.

r101958's picture

"New Orders declined from 21.69 to 22.79"


ConspiracyTheory's picture

Silent fool! In ZH, every good news is bad news, don't you see. If you like good news, don't come here. There is no good news, everything is ponzi scheme and manipulation (/sarc) 

Blue Horshoe Loves Annacott Steel's picture

Yes, & that was better than the previous month where the number rose from 23.02 to 22.45.

That was also better than analysts' estimates of 24.73.

Also, up is down & the sky is red.   Who knows WTF these numbers mean anymore? All US government stats have become Orwellian BS.

SmoothCoolSmoke's picture

Bernanke knows that on the Great Depression analog we are appraoching early 1937.  From there, in 12 months the Dow fell 51%.  He is insanely committed to not let it play out that way this time.  Fraud, theft, rape, murder, pillage...... whatever it takes.


ConspiracyTheory's picture

Wait... So the drop from late 2007 (14000) to 2009 (6400) is not 50% drop?

simone's picture

Just as a poor musician blames his instrument, the incompetent analyst blames his data.

boogerbently's picture


In an election year? ......NAW!!!

Like unemployment #'s, and banks NON-#'s, obama's "approval" #'s......

kito's picture

All is well in Oceania.......

adr's picture

It's all bullish when manufacturers are recieving new orders from clients they never heard of. Who cares if they actually exist as long as they pay. The biggest client, GOVERNMENT SHELL CORPORATIONS FUNDED BY THE FED. Products to nowhere, but statistics to pump the numbers for Obama.

Nothing reported is real. Real store inventory is at the lowest level in years. Most retailers are not writing bulk orders because they have 2-3 months worth of inventory at current sell rates. The only inventory that moves is the stuff marked 80% off.

When the gvernment spends trillions, is it that hard to believe they would throw a couple billion into the miniscule manufacturing sector each month to make it look like a massive manufacturing recovery? 

SheepDog-One's picture

I guess anyone not being proactive themselves in all this deserves to be duped and screwed. Wont be long now, and I wont have any pity for the 'victims' laying in ruin because they should have seen it coming.

FreeNewEnergy's picture

It's the new math:


yogibear's picture

People are catching on to inflation.  A pound of bacon is now 12 ounces. People are getting less and less for the same price. 

The dollar stores and discount stores are packed. People would rather pay $1.00 for a box of cereal rather than $3.99 for a named cereal. The 99% is finding it difficult to make ends meet. In the mean time Bernanke and Washington fudge the numbers to make everyone spend.

SheepDog-One's picture

But spending is actually way down too. 

Vampyroteuthis infernalis's picture

Thus we have it. The Department of Justice and Department of Peace. Cheers!

Blue Horshoe Loves Annacott Steel's picture

How's this possible?

Simple.  The 3 rising stats are given greater weight than the declining.

People have to stop being so negative.  The motto of the US government was stolen from that great Bobby McFerrin song, "Don't Worry, Be Happy".  You have to look @ the bright side & if there is none, we'll just create it.

There's a light @ the end of the tunnel!  It's a train, but it could be worse.

The same BS logic that ruined schooling, with the constant focus on always building up children's "self-confidence".  The US government treats the public like little kids, which most people still are.  They cannot handle any bad news. we must always show them rainbows & unicorns.

This will, of course, make the collapse even worse as the petulant children will neither be prepared nor able to take in stride the resulting decline in living standards. We have been told we "deserve" to live better than the rest of the planet & are entitled to squander treasured natural resources while producing nothing of value.  If we can't get it, our government will go out & kill the people that have it (who usually happen to be browner in skin tone).

Manifest Destiny in a techno disguise.

knightowl77's picture

I agree its all BS but why doesn't the opposition party call them on any of this....? I heard Rob Portman kind of agree "that things are getting better" though they have a long way to go...

Why not slam the party in power for fudging the numbers instead of agreeing with this crap??????? Is there an opposition party or just a party "we sort of agree"?  WTF

SillySalesmanQuestion's picture

More hopium smoking, magic, voodoo, propaganda, lies, BS, whoppers, tall tales, fables, fantasies,  shutzpah and shamans. Just DNR the damm patient and let the shitshow begin!

adr's picture

By the way, inventories declining for manufacturers is good. That means they shipped out what they have been holding. What is very, very, very bad is payments recieved dropped. Which means although manufacturers shipped out product they didn't get paid much for it. Inventories were so high that most manufacturers could not store any more produced goods. In order to make room for new orders, they needed to clear out inventory, most likely at a loss.

Many manufacturers are receiving orders, only to have the business sending the order go bust when the order is cancelled by the retailer. Remember, it takes around 60-90 days from the time an order is placed to when it ships. Business conditions can change rapidly over 90 days. Everything shipping now was ordered in November or December. The real tell will be March-April when the shipping window opens for January orders. All the real data shows the economy fell off a cliff in January. You may see inventories skyrocket and shipments crater. Or if nothing was ordered, everything will tank.  

Clowns on Acid's picture

Yeh....all those orders from Solyndra....did the WH take delivery anyway..?

El Yunque's picture

Woohoo!!! Scrap aluminum at .50 yesterdity.

I have shitpile of Old Milwaukee cans.

My inverntory is UP UP UP.


Make just enough on this load o'cans to buy a bottle of Jack (price adjusted up, of course) and celebrate the shit out of this madness. Downside, drinking the bottle nets me no return, have to work the can inventory back up, er maybe down, er who the shit knows buy more booze. I guess I'll have to figure out what I don't have to figure out how much I can make on things that are going nowhere, or some fucked line of logic.

I'm guessing these morons have an app for this shit: plug in a bunch of crazy stats and *pOOf* out pops a hopium biscuit.

BTW, the comments on this one, on this particularly fine day have created not one, but THREE nose blows of coffee this morning, my favorite being the Krugman born in 19.53 - epic coffee spew...

Glad this humor is free, because I damn sure can't buy it. Hope to fuck the check to the undertaker bounces.

Blue Horshoe Loves Annacott Steel's picture

I gotta agree.

The comments on this site are either hilarious or informative, sometimes both.  Makes staring @ an epic system collapse a lot easier to take.


asteroids's picture

The dollar is based on the "full faith and credit..." What happens when you lose both?

Hannibal's picture

Z-hedgies are getting lost in to much "detail", I wouldn't lose sight of the big picture, for the powers that be wont allow "coincidences!"

adr's picture

What still gets me every time is how nobody in Wall Street world actually understands manufacturing. The manufacturing surveys are not leading indicators. The surveys are an indicator of business conditions 2-3 months prior. Manufacturing is not a just in time business. Most of the lead time in manufacturing is procurment of materials, actual manufacturing usually happens the week before the ship date. So labor will always rise the month the orders are due to ship. Your quote is normally good for 30 days, and production is 6-9 weeks from the date of order. That is for small product US manufacturing. Big ticket items take far longer. So good January labor numbers are based on good orders received in November.

The only leading indicator is orders received. However that can be very misleading. A manufacturer could receive a few massive 30k unit orders for part A, but only make $.10 profit per item. Where a smaller 100 unit order for assembly C could mean $1000 profit per item. On paper the orders for part a make the company look like it is doing more business, but the other order is far better for business.

Here is a timeline for a company trying to actually sell an item:

August 2011 - Salesperson meets with retail buyer to show Spring 2012 product line. Buyer picks a few samples to review.

Sept 2011 - Retail buyer places order for product intended to ship 3/15/12 for in store date of 4/15/12.

Oct 2011 - Vendor shops quotes for manufacturing of product and places sample order. Quote valid for 30 days.

Nov 2011 - Order is placed for retail order along with up to 3 months replenishment.

Nov-Dec 2011 - Manufacturer orders raw materials, price of raw materials may have increased since Oct quote and the manufacturer must eat that cost.

Jan 2012 - Raw materials arrive and plan for order insertion into production line begins. Some production may begin if line is available.

Feb 2012 - Full production of order placed in Oct 2011.

March 2012 - Order ships to retail distribution center. Manufacturer waits for payment, generally 60 day terms.

May 2012 - Manufacturer hopefully gets paid.

The entire process takes 3/4 of a year to play out. That is just for one order. Think about all that happens to Wall Street during that same 9 months. Perhaps if you read this you might see how manufacturing indexes shouldn't have any bearing on how the market trades.