Nearly half of the New York region manufacturers reported a decline in new orders. Did a recession just start (or about to) as everyone gave up on the idea?
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 Empire State Manufacturing Report 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
- After falling twenty-four points last month, the general business conditions index shed another twenty-nine points, coming in at -43.7, its lowest level since May 2020.
- The new orders index fell thirty-eight points to -49.4
- The shipments index fell twenty-five points to -31.3, pointing to a large decline in orders and shipments.
- The unfilled orders index held steady at -24.2, a sign that unfilled orders continued to fall significantly.
- The inventories index came in at -7.4, suggesting that inventories shrank modestly, and the delivery times index remained below zero at -8.4, indicating shorter delivery times.
- The index for number of employees was little changed at -6.9, and the average workweek index came in at -6.1, pointing to a modest decrease in employment levels and hours worked.
- The prices paid index climbed seven points to 23.2, signaling a small pickup in input price increases, while the prices received index held steady at 9.5, a sign that selling price increases remained modest.
Forward Looking Indicators
- The index for future business conditions climbing seven points to 18.8.
- The capital spending index increased ten points to 13.7.
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 Whiplash
Please note that after manufacturers geared up for EVs, Only 6 Percent in the US want an EV for their Next Vehicle.
And the last jobs report was a stunner.
Employment Down 683,000 Job Revisions -71,000
Full time employment declined by over 1.5 million in December. Revisions were hugely negative again.
On January 5, I noted Jobs Up 216,000 But Employment Down 683,000 Job Revisions -71,000
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.
It’s interesting that the 2 year and 10 year notes are starting to flatten. The spread is closing and it’s roughly 15 basis points now. What do you make of that?
Well the time is coming were everything you buy at a store will be behind a security system. You will have to place it on order for it to be brought to you and will charged for it once you leave the store. We will all need a store app to shop there, tied to a ID, CC Bank Account, and Job status. I would also not be surprised if a social credit score will also be needed.
So the future in Jobs will be robotics repair, electronics, computers, and the industry that creates these. Fast Food places will be out as the margin for profit will be to small as the price to eat there is to high.
I guess that should be a topic “How will a social credit score affect your future?”
The numbers are going to continue to get worse monthly in 2024. A lot of people have reached their maximum credit card limits or the amount of credit available has been reduced due to late payments. People need to start living within their means.
In the tom lee, cnbc, mouth breather, jim cramer, yolo bro world, this is all good news and a great time to BUY BUY BUY and drive bubbled dogshit even higher.
It’s all broken and just a complete fraud. Makes 1999/2000 look logical and healthy
Mish, I have been a lurker on your site for at least 8 years, and have never responded to your posts. Today is the exception. With our country, having become actively socialist, the mood of the people is irrelevent. We will do as directed by our betters, the democrat elites; already being bent over, ask for more, and thank them.
Trump put a spell on NYS putas !
It’s like the Carter economy. It won’t crash. It will blow up before it hits the ground.
Though I was just a baby, there really does seem to be a lot of similarities between now and the late 1970’s malaise era, judging from history.
Biden = Carter
Jerome Powell = Arthur Burns
I believe Pirates invented the term “soft landing”. Feels like a slow motion train wreck where I live.
I think that’s global…
How much longer the situation goes on like this depends how much longer they can fool the Masses . . . eventually all Empires collapse from their debt load . . . just a matter of time . . .
Empires begin collapsing the instant they reach Empire status.
And yet it doesn’t have to be that way. I wonder why they repeat the same things over and over. Isn’t that the definition of insanity, doing the same thing every time and expecting a different result.
“History doesn’t repeat but it does rhyme.” Mark Twain
Human nature. Having that much power breeds arrogance and incompetence
What is the revision history on that stat?