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Friday, November 16, 2012

Empire and Philly FED data

The most recent surveys came out and were not very good.  Lets start with the Empire data.

Here is the main index.
Empire data source

Both the current business conditions index and the future business index have gotten below their values from last fall in the recession scare.  The big rebound that we saw last fall has not had a counterpart this year yet.
Lets look at the sub indexes.

The new orders crossed back into expansion, but at +3 they are barely there.  This might even be in the statistical noise for all I know.  I think we need to see another positive month before we can say there might be a real improvement.

Unfilled orders are still contracting.  They have been contracting all year.  I would have thought they would be running out of unfilled orders by now.

The employee index took a big tumble and at -14 is pretty negative.  If this is negative again next month we should start to see more negative employment data down the road.

The next two charts are from the future business six months out section.

The future new orders index ticked up a bit this month, but notice how much lower it is then Nov. last year.
It is good that it is still positive, but that is somewhat mitigated by the low value.

The future employment index contracted now at -1.  Notice how much lower this index is then it was last Nov. as well.  This seems pretty negative to future employment to me.  The hiring plans are clearly worse then last year.

Lets shift gears to the Philly FED data now.

Philly FED data source

The main index has crossed back to negative again.  There was a slight dip in the six month outlook, but not much.  Still no sign of a big rebound like the one that started late last year.  What about the sub indexes?

There was one positive print in the last seven months.  Orders aren't contracting like they were, back in June, but the are still contracting.  No sign of a rebound here yet.

Like the Empire survey, unfilled orders are still contracting.  Not good.

The employee index contracted again this month.  This sub index has correlated pretty well historically with the overall employment data.  It is not real clear to me why that has not shown up in the regular employment data.  It is possible that seasonal adjustments may be somewhat skewed by the late 2008 economic collapse.  I think the adjustments use 5 years of data.  At any rate, this is not a good looking chart for future employment.

Lets look at the forward looking sub indexes.

This looks very much like the Empire one.  It is still positive, but is considerably lower then it was last year at this time.

The future employment index continues to fall.  At +4 it is still in expansion territory, but it is also much lower then a year ago.

Neither of these surveys show any meaningful uptick in economic activity.  Both are worse in the future indexes then they were last year at this time.  I don't know how much if any impact Sandy might have had.  We might know more in next month's reports. The data is really consistent with levels in past recessions.  Keep in mind that the first quarter every year since the last recession has seen a considerable drop in GDP growth rate from the fourth quarter.  This is also the worst the data has looked at this point in the fourth quarter.  I don't think this bodes very well for early next year.


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