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I don’t often comment on the Fed regional reports. The ISM and PMI national reports are sufficient. But this report, on the heels of a terrible report in December as well, merits a look.Please consider the New York Fed for January 2024.
Business activity dropped sharply in New York State, according to firms responding to the January 2024 Empire State Manufacturing Survey. The headline general business conditions index fell twenty-nine points to -43.7, its lowest reading since May 2020. New orders and shipments also posted sharp declines. Unfilled orders continued to shrink significantly, and delivery times continued to shorten. Inventories edged lower. Employment and the average workweek declined modestly. The pace of input price increases picked up somewhat, while the pace of selling price increases was little changed. While firms expect conditions to improve over the next six months, optimism remained subdued.
Empire State Key Points
Forward Looking Indicators
Most of the time I ignore the forward indicators. The chart shows they are nearly always optimistic no matter how you shift the chart.If anything, the forward indicators are contrarian signals.Note that expectations near zero tend to mark bottoms. What’s noticeable here is quite a bit of optimism (+18.8) for no apparent reason.The report says “capital spending points to some improvement in investment plans.” I suggest it points to too much optimism.What’s Happening?I did not comment on the plunge last month. It could have been an outlier. But two consecutive plunges merited a closer look.And I will also look at the Philadelphia Fed report coming up next.Manufacturing WhiplashPlease note that after manufacturers geared up for EVs, .And the last jobs report was a stunner.Employment Down 683,000 Job Revisions -71,000Full time employment declined by over 1.5 million in December. Revisions were hugely negative again.(Click on image to enlarge)
Payroll and Employment Data from the BLS, chart by MishOn January 5, I noted It would not at all be surprising to see recession kick in after everyone gave up on the idea in favor of the soft landing thesis.More By This Author:Top Issue In Iowa Is Immigration, Not The Economy, 75 Percent Say Immigration Hurts Seeking Green Utopia, The US and EU Are Quietly Killing Vital Industries Only 6 Percent In The US Want An EV For Their Next Vehicle
