The committee places particular emphasis on two monthly measures of activity across the entire economy: (1) personal income less transfer payments, in real terms and (2) employment. In addition, we refer to two indicators with coverage primarily of manufacturing and goods: (3) industrial production and (4) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes.
We've had most of the industrial output information released for this month now (save for the Chicago index which comes out next week), so let's take a look at all the pieces to see what the result is.
The year over year (YOY) change in industrial production has been dropping for the entire year. In addition, it's starting to move into negative territory on the chart, indicating a yearly contraction. This is a macro level statistic -- a statistic for the whole country. Therefore, it's safe to say the country's manufacturing sector at best treading water.
Although we've seen three months of increases, the longer-term industrial production trend is down indicating the country is using less and less of its overall industrial capacity. Overall, this is another bearish signal.
The Chicago area is treading water, with consistent readings right around the 50 area. In other words, the sector is hanging on, but barely.
The New York are is not doing much better:
The general business conditions index, at 2.8, increased slightly from its July level of -4.9, indicating a marginal improvement in business conditions over the month. Roughly a quarter of respondents reported that conditions improved in August, while 23 percent reported that conditions had deteriorated. The new orders index, after increasing in July, fell slightly below zero to -2.2. The shipments index, in a similar pattern, gave up its July gains, falling to -0.9. The unfilled orders index held steady at -9.0, as did the delivery time index, at -3.4. The inventories index rose sharply after a steep decline last month, rising above zero to 5.6, its highest level in over a year.
The Philly Fed isn't doing much better:
From the related report:
The region's manufacturing sector remains weak, according to firms polled for the August Business Outlook Survey. Indexes for general activity, new orders, shipments, and employment were all negative again this month, although slightly higher than in July. Price pressures remain but were slightly less widespread compared to recent months. However, more than one-third of the firms continue to report higher prices for their own manufactured products. Most of the survey's future indicators moved higher this month, suggesting that the region's manufacturing executives believe growth in their sector will return over the next six months.
So, the bottom line is manufacturing is doing poorly (at best).
