Hot (or cold) on the heels of a disastrously bad University of Michigan sentiment print, Empire manufacturing whiffed, marking a somewhat inauspicious start to the new week.
The headline gauge for August printed 18.3, well below the 28.5 consensus and a marked decline from July (figure below).
The range, from three-dozen economists, was 15 to 35.6.
Frankly, I’ve grown weary of the “this series is volatile” disclaimer when it comes to real-time color on the regional Fed gauges. It feels like every, single month someone rolls out that caveat to explain away both beats and misses. If they’re so useless (and maybe they are) why bother commenting? Just ignore it.
In any event, I’m not inclined to ignore it, especially at a time when slowdown and “peak growth” concerns are pervasive. “Growth was much slower than in July,” the accompanying color said. Unfilled orders rose and delivery times lengthened, consistent with myriad, ubiquitous “bottleneck” anecdotes.
The prices paid gauge barely moved (it blipped lower to 76.1 from 76.8), while the prices received index jumped to a record high of 46 (figure below).
We’re now in “record after record” territory.
At the same time, the employment gauge dropped to 12.8 and the average workweek index fell, pointing to a moderation in the pace of employment gains and hours worked.
Businesses remained generally upbeat about the outlook. The future business conditions index rose, as did the index for future new orders.
All “volatile series” excuses aside, this was the second miss in a row on the data front stateside. When considered in conjunction with University of Michigan sentiment, the read-through is obvious: The Delta variant is causing consternation and price pressures are pervasive.
Of course, all will be forgiven if retail sales beats on Tuesday. If it misses… well, that’ll be three strikes in three sessions.
Dataflow may continue negative – including a slowdown in retail sales – but Covid new case curves for the states, on a log scale, looks like starting to round over.