It was the best of times, it was the worst of times. Empire Fed jumped to 19.28, notably better than the 15.00 expectation and reached highs not seen since June 2010, and up from the 19.01 last month. It doesn't get much better than that - even in the V-shaped recovery off the recession lows: if only sentiment surveys were the same as hard data - the US recovery would never be stronger. Alas, despite all this exuberant cycle high-ness - if only in the eyes of beholders, and certainly not in Q1 US GDP of -2.0%, the number of employees index tumbles from 20.88 to 10.75 and worse still the forward-looking index dropped after 3 months of gains.
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However, the worst news, comes for those who continue to, incorrectly, predict a CapEx renaissance:
As in May, indexes for the six-month outlook conveyed a strong degree of optimism about future business con-ditions. The index for future general business conditions fell four points, but remained high at 39.8. The future new orders index climbed to 44.5, and the index for expected shipments rose eleven points to 45.2. Indexes for expected prices were somewhat higher, with the future prices paid index ris-ing five points to 36.6 and the index for future prices received climbing two points to 16.1. The index for expected number of employees rose to 20.4, and the future average workweek index rose to zero. The capital expenditures index fell for a second consecutive month, dropping to 11.8—a sign that while capital spending plans were generally positive, spending growth was expected to slow.
In other words, hopefully offshore markets will keep demand strong, because local businesses sure aren't investing in capacity expansion. And why should they: their shareholders get a far greater immediate benefit when instead of investing in the future, companies reward shareholders with (debt-funded) stock buybacks here and now.
