Tuesday, January 17, 2012

New York State Manufacturing Expands in January; The Six-Month Outlook is Highly Optimistic

The Empire State Manufacturing Survey indicates that manufacturing activity expanded in New York State in January. The general business conditions index climbed 5.3 points to 13.5, and the 5 point gain in January follows strong increases of 8 points in November and 7.4 points in December (see brown line in chart).

According to the NY Fed, "The new orders index rose eight points to 13.7 and the shipments index inched up to 21.7. The prices paid index was positive and slightly higher than it was last month while the prices received index jumped twenty points to 23.1, indicating a significant pickup in selling prices. Employment indexes were positive and higher, pointing to higher employment levels and a longer average workweek."

The future indexes conveyed a high degree of optimism about the six-month outlook, with the future general business conditions index rising 9.26 points to 54.9, its highest level since January 2011 (see blue line in chart). That follows gains of 18.1 points in November and 13.5 points in December, and that 41 point gain in the future index over the last three months is the largest three-month gain in more than ten years.   


At 1/17/2012 12:55 PM, Blogger morganovich said...

this looks a little ominous though:

(Reuters) - More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.

In an ominous sign for America's economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts.

Some policymakers worry that a recent spike in credit card usage could mean that people, many of whom are struggling on incomes that have lagged inflation, are taking out new debt just to meet the costs of day-to-day living.

American households "have been spending recently in a way that did not seem in line with income growth. So somehow they've been doing that through perhaps additional credit card usage," Chicago Federal Reserve President Charles Evans said on Friday.

"If they saw future income and employment increasing strongly then that would be reasonable. But I don't see that. So I've been puzzled by this," he said.

After a few years of relative frugality, the amount of money that Americans are saving has fallen back to its lowest level since December 2007 when the recession began. The personal saving rate dipped in November to 3.5 percent, down from 5.1 percent a year earlier, according to the U.S. Commerce Department.

Loans taken from retirement savings accounts jumped 20 percent last year across all demographics, according to a survey to be published in March. Among lower earners they leapt by as much as 60 percent, said Aon Hewitt's Hess. The vast majority of borrowers, she said, need the money for essential expenses like bills, car repairs and college tuition.

a 1.6% drop in the savings rate with a further jump in borrowing could wind up accounting for much/most of the growth in the last year.

if true, that would be very worrying as such behavior is not sustainable and will leave us worse off than before when we run out of rope.


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