Tuesday, September 15, 2009

Empire Manufacturing Breakdown

Bloomberg details:

Manufacturing in the New York region grew in September at the fastest pace in almost two years, a sign factories are helping pull the economy out of a recession.

The Federal Reserve Bank of New York’s general economic index increased to 18.9 from 12.1 in August, the bank said today. Last month’s report was the first time since April 2008 that the reading was above zero, the dividing line between expansion and contraction for the Empire State index.

“Manufacturing is coming back and it’s not just in the auto sector,” said Robert Stein, senior economist at First Trust Advisors in Lisle, Illinois. “For the first time in a long time, at the early stages of an economic recovery it’s the old-time industries that are leading. And much of that has to do with the fact we had a huge inventory reduction.”
And here is the chart showing just that.



Now lets look at the details. The chart below shows the components of both the current and future expectations (six months out) of the survey. Expectations are clearly that the worst is now behind us.



I thought it would be interesting to see how accurate the survey was in predicting September's environment. Comparing the current conditions from September to this past March's six month forward outlook (i.e. September), we can get a sense and which areas have outperformed and/or underperformed.



So how'd respondents do? Besides inventories, lots of underpeformance (most notably in pricing and general business conditions).

The good news in all of this... we are an optimistic bunch!

Source: New York Fed