Following last month's collapse, hopes were high for the Keynesian data mean-reversion to bounce Empire Fed Manufacturing data solidly higher... it didn't. A small bounce to 10.16 (against expectations of 12.2) is the 2nd miss in a row and below January's mid-polar-cortex levels. Under the covers, it was even uglier as average workweek and prices received plunged to their lowest levels in 2014 (as prices paid only inched lower - sparking fears over margins). The number of employees also fell (despite a rise in new orders?) but the headline print was saved from worse by a surge in 'hope' yet again as the business outlook jumped by 6 points to 47.61 - its highest since Jan 2012!!
2nd miss in a row with only a small rebound
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Much of the subdata was a disaster, if only for the present:
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as Hope trumps reality once again...
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From the report:
The prices paid index inched down to 10.6, its lowest level in more than two years, pointing to a fairly slow pace of growth in input prices. The prices received index recorded its lowest reading in a year, falling seven points to zero in a sign that selling prices were flat. The index for number of employees edged down to 8.5, indicating a modest increase in employment levels. At -7.5, the average workweek index reflected a decline in hours worked for a second consecutive month.
But that's ok, because one can pay their bills with Hopium:
Indexes for the six-month outlook were generally higher this month and conveyed a strong degree of optimism about future business conditions.... Indexes assessing the six-month outlook generally rose this month, and conveyed considerable optimism about future business activity. The index for future general business conditions climbed six points to 47.6, its highest level since January 2012.
Which probably explains why algos promptly filled the 20 pip drop in the USDJPY upon the headline miss. Because there is always hope the central banks will get it right next time.
