I have not commented on the regional manufacturing reports much lately because they bear no resemblance to reality.
Setting reality aside, let’s take a look at the Empire State Survey which kicks off another month of regional surveys.
The Econoday consensus estimate for the Empire State region diffusion index was 15. The actual report was +9.8. Econoday praised this meaningless report as welcome.
A little less strength is probably welcome in the New York Fed’s manufacturing sample where gains at times have been unsustainable. The Empire State index came in at 9.8 in July vs Econoday’s consensus for 15.0 and against June’s very hot 19.8.
New orders are strong at 13.3 but down nearly 5 points from June while unfilled orders moved back into contraction to minus 4.7. Employment slowed to 3.7 for a 4 point dip while shipments also slowed but are still very solid at 10.5.
Another sign of slowing is a nearly 8 point dip in general expectations to 34.9 which is relatively moderate for this reading, one that always runs well above current assessments. Inventory building is slowing this month with price readings stable and favorable as both inputs and selling prices are showing positive pressure.
This report has been very strong this year and well above actual strength in the nation’s factory sector. Watch for Thursday’s Philly Fed report for the second regional update this month on the factory sector and where another outsized gain, at 23.9, is the Econoday’s consensus.
Empire State Index
Manufacturing Production
Manufacturing production is about where it was in 2005.
Manufacturing Production Year Over Year
Diffusion Index Problems
Manufacturing production is up 1.36% from a year ago. Yet the regional manufacturing reports and the ISM have been on fire.
Diffusion indexes like the regional manufacturing reports and the ISM survey have a flaw in that size does not matter, only direction matters. One small company improving counts will offset a large company faltering.
For example, Ford and GM carry no more weight than a company employing a hundred workers. A tiny company hiring 10 workers will offset 3,000 layoffs at Ford. A tiny company increasing production will offset a larger company decreasing production, or vice versa.
These kinds of things can average out. But they haven’t for a year. Industrial production has not lived up to expectations from the regional reports.
Mike “Mish” Shedlock
What continually surprises me is that I doubt even 10% of the people filling out the survey this month are the same ones who were filling it out even 5 years ago. The ability to compare over decades is totally lost by respondent turnover. Personal perception can be averaged out but the persons hired in 1983 versus 2009 are just not from the same planet.
It’s a shock that ANY manufacturing happens at all in the high tax, insane unions, more insane regulations of the state of New York…
–> “A tiny company hiring 10 workers will offset 3,000 layoffs at Ford. A tiny company increasing production will offset a larger company decreasing production, or vice versa.”
And a job that paid $70K per year that moved out of state, gets offset by a replacement job paying $30K… or welfare benefits paying almost as much.
In upstate NY (at least 100 miles north of NYC), there is really only one employer left: the state of NY. Some people work for whatever private company, but that private company counts the state as its biggest (and sometimes only) customer.
Ithaca, Syracuse, Rochester, and Buffalo get all their employment (directly or indirectly) from tax exempt universities (and student debt).
There is a big prison business upstate too.
Cuomo is a socialist, with big government spending to prove it. Since NY state mostly works for the state, and the state is spending with wreckless abandon… companies on the receiving end of that probably feel pretty good about themselves.
As long as the state taxes come from NYC, and the spending gets spread around — everyone will party like its 1999. Until they notice the debt levels.
I agree with the post that the real economy is very weak — but I can see why the state sponsored entities that make up most of NY state would feel good about a socialist in Albany and another running NYC.
When the bill arrives for all this spending (and/or the increased debt) — that’s when the socialists will scream
That’s when the socialists will demand a Federal bailout…
Upstate Employment is in healthcare, simple as.
Each regions top private employment stats:
https://www.labor.ny.gov/stats/nys/Largest-private-sector-employers-NYS.shtm
Region includes: Albany, Columbia, Greene, Rensselaer, Saratoga, Schenectady, Warren and Washington counties
Company Name
Albany Medical Center
Bechtel Marine Propulsion Corp.
Center For Disability Services
Ellis Hospital
General Electric Co.
GlobalFoundries
Hannaford Supermarkets
Price Chopper
St. Peter’s Hospital
Wal-Mart Stores, Inc.
Region includes: Genesee, Livingston, Monroe, Ontario, Orleans, Seneca, Wayne, Wyoming and Yates counties
Company Name
Carestream Health, Inc.
Rochester General Hospital
Rochester Institute of Technology
Sutherland Global Services
Tops Friendly Markets
Unity Hospital of Rochester
University of Rochester/Medical Center
Wal-Mart Stores, Inc.
Wegmans Food Markets
Xerox
Region includes: Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester counties
Region includes: Fulton, Herkimer, Montgomery, Oneida, Otsego and Schoharie counties
Company Name
A. O. Fox Hospital
Bassett Healthcare Network
Faxton-St Luke’s Healthcare
Hannaford Supermarket
Metropolitan Life Insurance Co.
Price Chopper
St. Elizabeth Medical Center
St. Mary’s Hospital
Utica National Insurance Group
Wal-Mart Stores, Inc.
Region includes: Clinton, Essex, Franklin, Hamilton, Jefferson, Lewis and St. Lawrence counties
Company Name
Canton-Potsdam Hospital
Claxton-Hepburn Medical Center
Champlain Valley Physicians Hospital Medical Center
International Paper Co.
Kinney Drugs
McDonald’s
Price Chopper
Samaritan Medical Center
St. Lawrence University
Wal-Mart Stores, Inc.
Region includes: Broome, Chemung, Chenango, Delaware, Schuyler, Steuben, Tioga and Tompkins counties
Company Name
Amphenol Aerospace
Arnot Ogden Medical Center
BAE Systems Inc.
Cornell University
Ithaca College
Lockheed Martin Corp.
Lourdes Hospital
United Health Services
Wal-Mart Stores, Inc.
Wegmans Food Markets
Region includes: Allegany, Cattaraugus, Chautauqua, Erie and Niagara counties
Company Name
BlueCross BlueShield of Western New York
Computer Task Group, Inc.
General Motors
Kaleida Health
M&T Bank Corp.
Mercy Hospital of Buffalo
People Inc.
Tops Friendly Markets
Wal-Mart Stores, Inc.
Wegmans Food Markets