And The Downtrend Returns: Inflation Disappoints As Empire Manufacturing Posts First Sub-Zero Print Since October 2011

The X-12/13-ARIMA seasonal adjustments on today's data were not quite up to snuff as both the CPI, printing at 0.0% (or 1.4% Y/Y) on expectations of 0.2%, the biggest CPI miss since January and the Empire Manufacturing index, at -5.85 on expectations of a +7.00 print, posting the biggest miss in 14 months. Notably, the number of employees declined in August from 18.52 to 16.47, while margins got crushed as Priced Paid soared from 7.41 to 16.47 as Prices Received slide from 3.70 to 2.35. And so baffle with bullshit returns, as following several weeks of better than expected, if largely seasonally adjusted, the speculation that NEW QE may be coming back is here again. In other words, yesterdays scorching retail data was good, but today's horrible NY manufacturing miss is better. At least to the complete idiocy that the market, and its "discounting mechanism" have become. Sure enough both EURUSD and gold spike on the weak news as the ghost of Bernanke's printing press is back in the room. Finally, how CPI could be unchanged when crude alone posted a 20% increase in July, and gas prices are back to doing their vertical thing, will always remain a mystery.


The Consumer Price Index for All Urban Consumers (CPI-U) was  unchanged in July on a seasonally adjusted basis, the U.S. Bureau of  Labor Statistics reported today. Over the last 12 months, the all  items index increased 1.4 percent before seasonal adjustment.


Major indexes posted small movements in July, with a 0.3 percent  decline in the energy index offsetting 0.1 percent increases in the  indexes for food and all items less food and energy. Within energy,  declines in the indexes for electricity, natural gas, and fuel oil  more than offset a small increase in the  gasoline index. Within the  food component, the food at home index was unchanged with major grocery store food group indexes mixed, while the food away from home index increased.


The index for all items less food and energy rose 0.1 percent in July, ending a streak of four consecutive 0.2 percent increases. The shelter index rose 0.1 percent for the second month in a row. The indexes for medical care, tobacco, household furnishings and operations, and apparel also increased, while the indexes for airline fares, used cars and trucks, recreation, and new vehicles all declined.


The 12-month change in the index for all items was 1.4 percent in  July. This compares to 1.7 percent in June and is the smallest 12- month change since November 2010. The index for all items less food and energy rose 2.1 percent for the 12 months ending July, a slight decline from the 2.2 percent figure in June and its smallest increase since October 2011.

From the Empire Fed:

Business Conditions Deteriorate


In August, the general business conditions index fell thirteen points to -5.9, slipping below zero for the first time since October of 2011—a sign that activity declined for New York manufacturers over the month. Twenty-two percent of respondents reported that conditions had improved, while 28 percent reported that conditions had worsened. The new orders index fell three points to -5.5, its second consecutive reading below zero, pointing to a small decline in orders. The shipments index fell six points to 4.1, and the unfilled orders index inched higher but remained negative at -10.6. The delivery time index fell six points to -7.1, indicating that delivery times were shorter, and the inventories index declined eight points to -8.3, suggesting a modest decline in inventory levels.


Optimism Continues to Wane


Indexes for the six-month outlook were generally lower than last month and indicated a continued decline in optimism about future conditions. The future general business activity index fell for a seventh consecutive month, dropping fi ve points to 15.2. The future new orders index fell eleven points to 2.4, and the future shipments index declined seven points to 8.3. The future prices paid index fell to 31.8, its lowest level in more than a year, and the future prices received index inched down to 14.1. The index for expected number of employees fell to 3.5, suggesting that employment levels were expected to be only  slightly higher in the months ahead, and the future average work week index was -8.2. The capital expenditures index fell seven points to 12.9, and the technology spending index fell thirteen points to 5.9.