Economic Data Dump Keeps Everyone Confused, Pessimism About Future Increases

We bring you "baffle with bullshit" Tuesday edition, where retail Sales ex-autos and gas miss consensus modestly, but the Empire Manufacturing beats by a mile... even as forward business conditions slide to lowest since October.

To summarize:

  • Consumer Price Index: monthly change prints at 0.0%, same as expectations of 0.0%; Core CPI +0.2% also same as expected: source
  • April Retail sales: headline +0.1% same as consensus, and lowest of 2012; Ex-Autos and gas +0.1% missing consensus of 0.3%, and the lowest since December: source
    • Data shows declining gasoline sales offset rising rents and overall retail sales, says Bloomberg economist Joseph Brusuelas
    • Retail sales “very weak,” with “consumer reacting to dwindling real incomes,” says Bloomberg economist Rich Yamarone
  • Empire State Index (May): + 17.09; +9.0...but six months forward outlook is just dismal: source
    • Number of employees up to highest since May 2011 from 19.28 to 20.48... remember: Baffle with BS
    • New orders 8.32 in May after 6.48 in April
    • Shipments 24.14 after 6.41
    • Inventories 4.82 after 1.2

Current Empire General Business Conditions:

and 6 months forward General Business Conditions:

As usual, the Fed retains the option to do NEW QE... and it has the option not to. All up to Europe.

And this month's special Empire Fed Survey:

Firms Expect Moderate Increases in Input and Selling Prices

The supplementary questions in the May 2012 Empire State Manufacturing Survey focused on past and expected changes in both the prices fi rms pay for inputs and the prices they charge their customers. Some of the same questions had previously been asked in surveys conducted in May 2011 and earlier.

Respondents estimated that the prices they paid for inputs rose 3.6 percent, on average, over the past twelve months—down substantially from 8.1 percent in last May’s survey. The median increase reported in the current survey was 3.0 percent, down from 5.0 percent. The average and median increases anticipated for the next twelve months were virtually identical: 3.5 percent and 3.0 percent, respectively. Both measures were 2 percentage points lower than the corresponding expectations in last May’s survey.

In response to a question about the perceived probabilities of various price scenarios, firms in the current survey estimated a 9 percent chance, on average, that prices paid would rise by 8 percent or more, and a 64 percent chance that prices paid would rise by at least 2 percent. These probabilities are considerably lower than those cited in last May’s survey but not all that different from those reported in the May 2010 survey.

Respondents in the current survey, on average, indicated a 5 percent chance that prices would decline by more than 2 percent—a slightly higher probability than in last year’s survey. The likelihood that prices would remain relatively steady (within 2 percent of current levels) was  seen to be about 30 percent. In assessing past changes in their selling prices, fi rms reported an average price increase of 1.7 percent and a median increase of 2.0 percent—both about the same as in last May’s survey. Looking ahead to the next twelve months, fi rms predicted a 2.1 percent average increase and a 3.0 percent median increase—down from 3.6 percent and 4.0 percent, respectively, in last year’s survey. Respondents, on  average, saw a less than 5 percent chance that they would raise their selling prices by 8 percent or more but a 48 percent chance that they  would raise prices by at least 2 percent.  Both probabilities are lower than estimated in last May’s survey. At the other end of the spectrum, the average respondent reported a roughly one in ten chance that selling prices would fall 2 percent or more—a somewhat higher probability than that cited in last May’s survey.