Empire Manufacturing Resumes Downward Slide, Misses Consensus, Future Conditions Index At Lowest Since February 2009

Tyler Durden's picture

The first August leading indicator starts off with a thud, after the Empire State manufacturing index just confirmed that the recent brief push higher was, well, transitory. Printing at -7.72, on expectations of 0.00, down from -3.76, the first diffusion index of the month just saw a third consecutive contractionary print in a row, setting the stage for much more ugliness in August. The summary was succint: "Business conditions continue to deteriorate: "The general business conditions index fell four points to -7.7. The new orders index also fell, inching down to -7.8; the negative reading—the third in a row—indicated that orders had declined. The shipments index held steady at 3.0, a sign that shipments were slightly higher over the month. The unfilled orders index continued to drift down, falling three points to -15.2. The delivery time index was little changed at 0.0. The inventories index dropped two points to -7.6, suggesting that inventory levels were down slightly." What is surprising is not that the current outlook is deteriorating, but that for the first time, the future index finally cracked as the hopium has finally ran out: "The future general business conditions index fell twenty-four points to 8.7, its lowest level since February 2009. The future new orders and shipments indexes dropped to their lowest levels since September 2001." I.e., hope is no more. And there is nothing to take its place.

Looking at individual indices, the New Orders index dropped to November 2010, Unfilled Orders dropped to December 2010, Inventories dropped to December 2010 levels, Prices Paid down to November 2010 levels, as as Priced Received. Amusingly the Number of Employees increased modestly from 1.11 to 3.26, coupled with an increase in the Average Employee Workweek: and there's your spin.

And in a special supplementary report, the NY Fed indicated that manufacturer still face difficult finding workers with select skills:

In a series of supplementary questions to the August 2011 Empire State Manufacturing Survey, fi rms were asked how much diffi culty, if any, they were experiencing in fi nding workers profi cient in select skill categories; they were also asked to estimate the costs of the training needed to bring new hires up to speed. The table below shows the results of the survey alongside the results from a parallel survey conducted in March 2007.

 

Despite the current slack job market, manufacturers’ responses in this month’s survey were not substantially different from those recorded in March 2007, when New York State’s unemployment rate was below 4½ percent. As in the earlier survey, workers with advanced computer skills were seen as the hardest to find: On a scale of 0 to 100, this task received a difficulty rating of slightly more than 61 in this month’s survey—almost identical to the rating it received in 2007. (See the table for a detailed explanation of the diffi culty measure.) Finding workers who are punctual and reliable received the second highest difficulty rating, followed by the task of finding workers with good interpersonal skills; these results, too, mirrored those from the earlier survey.

Respondents were also asked to estimate training and related costs for new hires as a percentage of overall compensation. On average, manufacturers indicated that such costs accounted for 6.5 percent of total compensation in the past year, compared with 5.6 percent in a typical year—percentages that closely tracked those cited in the 2007 survey. The median proportion was reported to be 5.0 percent, for both the past year and a typical year.

 

Finally, in a question not posed previously, manufacturers were asked how much they expected a typical worker’s wage or salary to increase (or decrease) over the next twelve months—not including benefi ts and not including any promotion or change in hours worked. The vast majority of respondents, 79 percent, predicted at least some increase in pay, while 21 percent expected wages to remain unchanged; no respondents anticipated a decline. The average expected pay increase was reported to be 2.4 percent, while the median was 2.8 percent.

Bottom line: it is impossible to find a punctual worker who knows what they are doing in the New York area.

Full report

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Temporalist's picture

I agree with the sarcasm but the futures are slowly dropping.  We'll see what happens today the propagandists will find something else to spin...like Google overpaying for Motorola.

spiral_eyes's picture

manufacturing, bitchez!

(manufacturing quadruple A credit ratings, that is)

http://azizonomics.com/2011/08/14/why-warren-buffett-is-wrong/ 

Durgesh Sakhardande's picture

Google has cash and company’s with cash are trying to acquire market share and buy growth. 

There are value companies out there but the sentiments are bad. 

For eg. Micron.. 

 

Everyone knows the apple story in the tech space

 


Micron says NAND chip demand buoyed by tablets

10 Aug 2011 - 00:33

* Tablet demand helps Micron weather economic jitters

* Solid-state drives also boost demand

* Company eyes fallout from U.S. debt downgrade

 

SANTA CLARA, California, Aug 9 (Reuters) - Orders for Micron Technology Inc's <MU.O> NAND memory chips are holding up despite growing economic uncertainty, thanks to strong demand from manufacturers making tablets and solid-state drives, a senior executive at the chipmaker said.

Glen Hawk, vice president of NAND Solutions at the top U.S. maker of memory chips for computers and mobile gadgets, said it was too soon to know whether Standard & Poor's downgrade of U.S. sovereign debt on Friday and increased financial troubles in Europe would hurt demand.

"We haven't seen any effects in a week, but yes, people are going to be conservative about spending money and we're absolutely mindful of that," he told Reuters at an industry event on Tuesday.

Persistently high U.S. unemployment and the danger of a European financial crisis have depressed many electronics manufacturers at a time of year when they are normally busy preparing for the brisk back-to-school season.

Micron also makes DRAM chips used in personal computers, whose sales have been crimped in the United States and Europe by economic worries and the growing popularity of tablets.

Demand for chips used in consumer electronics like TVs, game consoles and cameras is expected to be less than normal this back-to-school season, although purchases of Apple Inc's<AAPL.O> iPad are expected to remain strong.

The red-hot success of the iPad and iPhone have made Apple a top consumer of NAND chips, driving manufacturers to increase their capacity.

Corporate IT managers are also increasingly replacing hard disk drives with NAND chips in the form of solid-state drives (SSDs) to speed up their data centers.

"I wouldn't characterize the NAND side of things as slower than seasonal," Hawk said. "There are two segments offsetting any other economic weakness. That's the tablet explosion and also the adoption of SSDs is absolutely increasing."

(Reporting by Noel Randewich; Editing by Richard Chang)

((noel.randewich@thomsonreuters.com; 415-677-2542; Reuters Messaging: noel.randewich.reuters.com@reuters.net)) Keywords: MICRO

banksterhater's picture

ZIRP has caused 90% of the deals that NEVER would have been done in a normal rate environment, they're overpaying in every sector.

spanish inquisition's picture

Could be the start of getting rid of dollars before they are worthless..

Ned Zeppelin's picture

It's all about the USD. If down, DOW up on vapor volume and bots batting the ball back and forth!  Europe's calm will not last long. 

SheepDog-One's picture

When the USD is finally worth 1/8th of 1 cent, the DOW will be perched about 15,000 or so, probably by next month. 

pepperspray's picture

True blue's face is turning red

Cassandra Syndrome's picture

Empire Strikes Back Bitchez... Darth Bernanke to power up the Death Star for attack

Cognitive Dissonance's picture

Yeah.......but it's not as bad as 2008........yet.

SheepDog-One's picture

Well, the problem is these poor companies are trying their hardest to hire many more workers to fill their huge backlogs of product orders, but they cant find anyone with SKILLS! See? Its the american peoples fault once again! 

Somehow we HAD plenty of american workers with skills, up till 2008, but now theyre all gone. 

adr's picture

do you know what the average pay at these small manufacturers is? usually less than $10 an hour. You are talking about jobs that require real skill that pay the same as Home Depot. why would anyone take a job with pretty bad working conditions and danger to your personal health when you could make the same money or more at Walmart.

Machine shops near me have all kinds of jobs advertised in the local paper. they all ask for experience yet advertise wages of $8.75. Minimum wage to work in a factory that reaches 120 degrees in the summer. They wonder why they don't get any applicants.

The reason is something I talked about before. Manufacturing is dead in the US becuase there is no money to be made. Mass retailers all want 60% margin or higher and as a manufacturer you can't pay employees a living wage when you can only generate a few cents on a product that sells for $10. 

Look what Home Depot charges you for one bolt. I had to pay $.75 for a single bolt that should have cost $.05. I guarantee Home Depot paid $.05 for that bolt and because there is nowhere else to buy it they just rape you over and over.

SheepDog-One's picture

Well of course, I was talking about that in the 1990's when the country was abuzz in NAFTA and GATT euphoria and our new economic model 'borrow and consume'...I said it would never work because you cant borrow forever, and you cant compete with people making $2 a day. Nothing new to me, in fact I was one of the few that called it *fail* while everyone else was in market euphoria and flipping houses.

overmedicatedundersexed's picture

somehow I knew it was the" workers" fault..now if those tax payers would stop being so cheap and cough up more taxes to the masters of the universe the economy would be just fine.

SheepDog-One's picture

AH yes, another indicator that will allow Bernank to make the case that while all is well and markets are melting up, we need another $2 trillion free money to support the ridiculous 'recovery'.

banksterhater's picture

CNBS is NOT REPORTING THIS! Instead they're drooling over "Ace" Greenberg like he's God.

Irish66's picture

I was watching and thought CNBC didn't say a word.

Durgesh Sakhardande's picture

I was watching bloomberg and all they are talking about is google ... and only google since the numbers have released.

Snidley Whipsnae's picture

I think that by now you would take for granted that main stream media will ignore any bad news and put any distraction available on the boob tube... Why do you expect any different? Why are you watching CNBS?

Cdad's picture

And over at the BlowHorn [CNBC], not a word is spoken of the report.  Instead, we are all waiting on pins and needles to learn the name of the Quickster's new baby.  F'n brilliant!

Credibility at the network continues to follow the chart path of the Empire Manufacturing Index.  Cred valuation expected to hit negative integers by week's end.

 

SheepDog-One's picture

CNBC left all credibility in the dust long ago, 2008 was the line where the media were told 'go with us, never ask a question again and say exactly what youre told, or youre forever finished in this business'.

Becky Quicks offspring- 'Bezelbub'. Little fukers probly gonna have horns and hooves!

jerry_theking_lawler's picture

if it comes out with a bad combover and big goofy glasses, it will certainly be warren jr....

High Plains Drifter's picture

economic conditions continue to deteriorate but what the hey. let's go on a junket to israhole...

http://www.politico.com/news/stories/0811/60853.html

gwar5's picture

All the good ones are leaving NY taxes behind.

Pay Day Today's picture

"Dropped to their lowest levels since September 2001"

What, was there something bad going on then? And is it bad that we're back there?

sbenard's picture

New orders are at the worst level in a decade? Ouch! That's even worse than the depths of 2009! There is no way to sugar-coat this report. It's UGLY!

SheepDog-One's picture

Hey as long as we've got ZIRP, then companies are partying down like Google way over paying for Motorola, and CNBC can be obsessed and fanatic about it like girls at a Beatles concert. Billionaires PLAYIN!

nmewn's picture

Let the Fraud Street bleating for QE commence!

I want myyy...I want myyy...I want my QEthreee...

http://www.youtube.com/watch?v=lAD6Obi7Cag

SheepDog-One's picture

Funny part is, its not being mentioned anywhere but here, and futures havent even been dinged at all. Panicked bleating? All I hear is crickets chirping. Wheres the fear and panic? I see none at all, Wall St and financial media are partying like its 1929.

nmewn's picture

As long as the musics playing...Chuck Prince

Esso's picture

"Wall St and financial media are partying like its 1929."

Good one. We are so screwed.

overmedicatedundersexed's picture

with the lack of skilled people guess we need more B1 visas after all our UE rate is at historic lows er well UE is just so last century.

lizzy36's picture

No worries.

Obama has a new economic plan: Patent Reform.

Because nothing says job creation like "patent reform".

Bachmann also has a plan. But hers is mostly how to "reprogram" the gays. One wonders if she is going to try that on her husband first.

SheepDog-One's picture

LOL, Bachmans gay ass husband...and shes now been busted using bribery to win the STUPID straw poll....my God we're going down what a ruined nation.

cowdiddly's picture

AH yes the Corn Dog Queen. That's it. The answwer to our problem. Make all the gays watch the Corny Dog manuevre over and over...............................................

jerry_theking_lawler's picture

well, at least we know how she got into politics...

overmedicatedundersexed's picture

hey thereLizz , you seem fixated on homosexual issues ..why's that?

 hint: a life style defined by one's sexual lusts is not a great investment in a normal society. self delusion about ones sexual nature as defined at birth is not what supports mental health. .current DSM not withstanding. 

SheepDog-One's picture

really...'sexual nature' is defined at birth? So you really liked getting your temperature taken a lot then.

Temporalist's picture

I think Lizz is pointing out the hypocrisy in trying to "reprogram" gays as they do when Marcus may be in the closet.

SheepDog-One's picture

Yea, lets ignore the obvious Bachman hypocrisy and propensity for underhanded skullduggery in something as silly as a state fair straw poll....and turn it into a debate about being born gay. 

SheepDog-One's picture

Why do these people look so out of their element whenever pictured eating a corn dog, or like Kerry biting a sandwich...like theyre never done such a thing before?

Temporalist's picture

They are used to drinking the blood of feti through a straw?

FoieGras's picture

Wonder what Rosenberg has to say about this. He must be doing victory laps around the Gluskin Shef office.

High Plains Drifter's picture

cramer is in his 60's now. i have to say, is this guy still snorting blow?  does he drink some major hundred mile coffee or something?  

MFL8240's picture

Summer of recovery year 2 is definately living up to its name.  Where is the media to question the clown and vice clown on thier lies?