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Market Commentary

More Pluses in Manufacturing
By Charles Payne, CEO & Principal Analyst
6/15/2017 12:22 PM

Mixed, but encouraging, results from two important Federal Reserve manufacturing reports from the New York Fed and Philadelphia Fed out today.

While the Philly Fed report declined to a headline reading of 27.6 from 38.8, it bettered the consensus of 24.0.  The six month outlook, however, is a serious concern.

https://www.philadelphiafed.org/-/media/research-and-data/regional-economy/business-outlook-survey/2017/bos0617chart1.jpg?w=600

The report saw bright spots with prices received at 20.6 from 15.3, and new orders at 25.9 from 25.4.  Worrisome spots include shipping, which plunged to 28.5 from 39.1.

A special question on employment was telling. 

Q. If you expect to increase production you will:

  1. Additional Hiring 25.8%
  2. Increase Hours 35.5%
  3. Increase Productivity 35.5%

Essentially, this means investing is taking place in computers and automation at a faster pace than hiring additional employees. (In tomorrow’s morning report, I will discuss the skills gap and new White House apprentice program.)

Empire State Manufacturing Report

At 19.8, the headline staged a dramatic improvement lifting this to the highest level since September 2014.

  • 36% reported improved business conditions
  • 16% reported worsening business conditions

The bottom line is manufacturing remains elevated and positioned to improve.

As for the broad market, I like that selling seems to be exhausted, although not sure what sparks a rebound other than nibbles building into momentum.

Do not panic or be anxious.  Let’s stay on the sideline for now.


 

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