Remember the surge in the Empire Fed which was the straw so desperately clutched by all those who still held on to hope the US economy was still kinda sorta growing? Oops. The May Philly Fed just came out and was a disaster, printing at -5.8, down from 8.5 and crashing expectations for an increase to 10.0. This was the first contractionary print since September 2011 and the biggest miss since August 2011, but the worst news is that the Number of Employmees indicator was in absolute freefall, plummeting from 17.9 to -1.3. And now come the downward NFP revisions, and NEW QE (because courtesy of AAPL it is no longer QE [X] anymore) whispers.
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From the report:
Firms responding to the May Business Outlook Survey indicated that manufacturing growth fell back from the pace of recent months. The survey’s broad indicators for general activity fell into negative territory for the first time in eight months. Indicators for new orders and employment also suggested slight declines from April. Input price pressures were less in evidence this month, and for the first time in nine months, more firms reported price declines for their products than reported increases. The survey’s indicators of future activity remained positive but weakened considerably from April
Indicators Suggest Slowing
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell from a reading of 8.5 in April to ?5.8 in May (see Chart 1). The index for new orders fell four points, from 2.7 to ?1.2, its first negative reading in eight months. The shipments index edged 1 point higher and remained just above zero. The indexes for current unfilled orders and delivery times both declined and registered negative readings, suggesting lower levels of unfilled orders and faster deliveries. Firms’ responses suggest a slight decline in employment this month. The current employment index, which had been positive for eight consecutive months,decreased 19 points, to ?1.3. The percentage of firms reporting decreases in employment (16 percent) was slightly higher than the percentage reporting increases(14 percent). Firms also reported a slight decrease in average hours worked compared with April.
And the worst news is for the ISM, courtesy of John Lohman:
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