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Thursday, September 17, 2015 12:18 PM

Philadelphia Fed Manufacturing Survey "Something Very Wrong"

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Some are just beginning to figure out there are manufacturing sector troubles.

The late-to-the party quote of the day comes from Bloomberg who just now realized "There may very well be something wrong with the manufacturing sector."

The quote is in response to the Philadelphia Fed Business Outlook Survey where the Consensus Opinion was for a "respectable" 6.3 reading but the actual reading was -6.0, well below the consensus range of 2.50 to 10.50.

There may very well be something wrong with the manufacturing sector, at least in the Northeast where the Empire State index has been in deep negative ground for the last two months followed now by a minus 6.0 headline for the Philly Fed index. This is the first negative reading since February 2014.

But the headlines for both of these reports, which are not composite scores of separate components, are sentiment scores of sorts, rough month-to-month assessments of general conditions. A key positive in today's is continued strength in new orders which rose 3.6 points to 9.4. Unfilled orders, nevertheless, have been trending into contraction, at minus 6.6 for the third straight negative reading.

But some details are very strong with shipments at plus 14.8 and employment at plus 10.2 for a 5-month high. In a negative signal also seen in the Empire State report, prices received, that is prices for final goods, is in contraction at minus 5.0.

The Fed is wondering whether global volatility and stock market losses are affecting consumer confidence. Early data this month from regional Feds suggest the effects may also be extending to business sentiment.
Surprise, Surprise

The Philadelphia Fed surprise comes on the heels of Shocking Weakness in Empire State Manufacturing Report, released on Tuesday.

There are even bigger troubles in the Dallas Fed and Kansas City Fed regions due to the collapse in oil prices.

For example Dallas Fed Region Activity Plunges Well Below Any Forecast

Also note Kansas City Region Activity Remains in Deep Contraction

And what about the Richmond region?

I'm glad you asked. For the answer, please consider Regional Manufacturing Expectations From Mars.

Today we learn "There may very well be something wrong with the manufacturing sector, at least in the Northeast". 

Mike "Mish" Shedlock

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