Empire Fed Records First Positive Print Since July 2012

After the January Empire Manufacturing data came at the worst level in years, it was only logical that the February print would post a massive surge of some 18 point, from -7.78 to 10.04, the highest since May 2012, the first positive print since August, and above the highest expectations whose consensus saw a rise to -2.00. The driver: a surge in the New Orders number which soared from -7.18 to 13.31, indicating that the recent northeast snowfall did little to impact manufacturing unlike various other series, whose miss was blamed on snow in the winter. And while there were increases in all subindices, the divergence between prices received, which dropped, and prices paid, which rose, implies corporate margins will continue to suffer. But in this new dot com/housing/credit bubble, who cares about such trivial things as profitability.

From the report:

The February 2013 Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved for the first time since the summer of last year. The general business conditions index rose into positive territory, advancing eighteen points to 10.0. The new orders index also rose sharply, climbing twenty points to 13.3, and the shipments index increased to 13.1. The prices paid index pointed to a continued acceleration in selling prices, and the prices received index, while positive, inched lower. The index for number of employees rose for a third consecutive month and, at 8.1, registered its first positive reading since September, though the average workweek index remained negative. Indexes for the six-month outlook were noticeably higher and suggested a firming in the level of optimism about future business conditions.


Business activity expanded for New York manufacturers, according to the February survey. The general business conditions index rose into positive territory for the first time since July 2012, climbing eighteen points to 10.0. Twenty-nine percent of respondents reported that conditions had improved over the month, while 19 percent—a significantly lower percentage than in the January survey—reported that conditions had worsened. The new orders index also rose sharply, climbing twenty points to 13.3, its highest level since mid-2011. The shipments index advanced sixteen points to 13.1, and the unfilled orders index rose six points to -2.0. The delivery time index moved up four points to 2.0, suggesting that delivery times were slightly longer. The inventories index rose nine points to zero—a sign that inventory levels flattened after declining in recent months.


Input price increases continued to pick up this month. The prices paid index rose for a third consecutive month, advancing four points to 26.3. The prices received index inched down three points to 8.1, pointing to slightly smaller selling price increases. The index for number of employees rose for a third consecutive month, climbing twelve points to 8.1, its first positive reading since September of last year. The average workweek index remained slightly negative and was little changed at -4.0.

And on the ever critical topic of capital expenditures, there is little hope that the deteriorating mfg asset base will ever get renewed:

In a series of supplementary questions, manufacturers were asked about their 2013 capital spending plans and how the plans compared with actual spending for 2012. Roughly the same proportion of respondents indicated that they expected to raise as to lower capital spending this year. However, the median amount budgeted for 2013 was up 11 percent from what had reportedly been spent in 2012. The most widely cited factor constraining 2013 capital investment plans was tax and regulatory considerations. In the February 2012 and 2011 surveys, more respondents had identified this as a positive than a negative factor.

But at least there will be cash for such shareholder gratifying sugar rushes as M&A and dividends.


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