12/15/2011
By David Urani, Research Analyst

The Empire State manufacturing index came in with a good increase to 9.5 for December from 0.6 in November. The components mostly went favorably as well, with new orders going from negative 2.1 to positive 5.1, shipments rising from 9.4 to 20.9, and employment rising from -3.7 to 2.3. Interestingly, inventories went negative for the sixth month in a row, which may be a sign more production is necessary to rebuild supply.

The Philadelphia Fed index, like the Empire State index earlier this morning, showed a decent jump, up to 10.3 from 3.6 month to month; the consensus was looking for 5.0. The gain in new orders to 9.7 from 1.3 was the main driver, while shipments dipped slightly to 6.7 from 7.3. As we have seen in other economic reports, inventories were on the decline, falling to -14.9 from 6.6.

Industrial production for November was down 0.2% month to month, which came as a surprise as the consensus estimate was calling for a 0.2% increase. That followed a 0.7% increase in October. The drop in production was attributed to a 0.4% decline in manufacturing, partially offset by slight increases in mining and utilities. This is the first time the data has shown a decrease since April.

The result flies somewhat contrary to the previous ISM manufacturing report, and with this morning's Philadelphia and Empire State indices. Autos and parts declined by 3.4% for the month, but even excluding autos, production was still down 0.2%. Some blame may be pointed at flooding in Thailand, which has limited computer parts supplies.

David Urani
Wall Street Strategies