The latest read on jobless claims wasn’t the only piece of bad economic news in the market Thursday.
Although nobody is going to spend too much time obsessing over the Philly Fed, it gets a mention here today, not necessarily because of the headline miss, but rather because of the “internals,” if you will.
That’s not to say the headline print wasn’t a miss — it was. 11.1 is a lower number than 20, last I checked, and 20 was consensus. 11.1 marks a pretty large decline from November’s 26.3.
“Hope” fell too. The future activity gauge dropped to 39.2, the lowest since August.
But the standout (in a bad way) was the current employment gauge, which slumped to 8.5 from 27.2. That’s a pretty sizable drop.
“Employment increases were reported by 18 percent of the firms, down from 34 percent in November,” the accompanying color notes.
At the same time, new orders nosedived to 2.3 from 37.9.
The euphemistic take from the Philly Fed is this: “Manufacturing activity in the region continued to grow, but growth was less widespread [and] some future indexes also moderated this month but continue to indicate that firms expect growth over the next six months.”
I suppose what I would say is that, on balance, the incoming data now clearly shows the US economy decelerating, and at a possibly precarious clip. Earlier this week, I suggested that while the new stimulus deal is welcome, it’s too late. The data is starting to confirm that.
You have to be careful when reading data about the underlying index composition and what it is trying to measure. For example, many folks look at index readings below 50 indicate a recession or decline but if the index is a dispersion index a recession is really indicated by a number below that. This does not contradict what H is saying, just that one must be careful when reading indexes. The economy is clearly slowing down based on the releases we see and the upcoming shutdowns.