Unlike housing and auto sectors, economic regions dependent on oil activity remain severely stressed.
For example, the Kansas City Fed regional factory report came in today at -9, compared to an Economic Consensus of -4.
Factory activity in the Kansas City Fed’s region remains in deep contraction, at minus 9 in August vs minus 7 in July and deeper than the Econoday consensus for minus 4. New orders are also at minus 9 with backlog orders at minus 21. These are deeply depressed readings that point to a long run of weak activity in the months ahead. Production is already far into the negative column at minus 16 with hiring at minus 10. Price readings in the August report are in contraction.
This report speaks to significant distress for the region which is getting hit by the oil-led fall in commodity prices. Taken together, regional reports have been mixed to soft so far this month, pointing to slowing for a factory sector that got a bit boost from the auto sector in June and July.
Mike “Mish” Shedlock