April U.S. Mid-Atlantic factory output weak-survey

Biz.Yahoo/Reuters ^ | April 17, 2003

[Starwind]

April U.S. Mid-Atlantic factory output weak-survey Thursday April 17, 12:11 pm ET

NEW YORK, April 17 (Reuters) - Manufacturing in the U.S. mid-Atlantic region remained weak in early April as factories trimmed production and economic activity paused during the U.S.-led war in Iraq, but expectations for the future were more upbeat.

The Federal Reserve Bank of Philadelphia said on Thursday its April index of factory business conditions fell to -8.8 from -8.0 in March, the second month of shrinking output. That was below the -4.9 reading forecast by economists, but not as weak as many in the market feared.

The cut-off date for the survey was April 10, just one day after U.S. forces swept into Baghdad, bringing an earlier end to the battle than many had expected. Economists have warned that economic indicators from early April may show greater weakness than figures from the post-war period, and a national survey due in two weeks may not appear as bleak.

New orders, a key indicator of future growth, fell to -11.2 from -4.3 in March. The employment component dropped to -12.5 from -8.8 the previous month. But the six-month outlook remained high at 45.8.

The Philadelphia Fed report is one of the first readings on manufacturing each month. It is closely watched for hints on the overall health of the sector, which makes up about one-sixth of U.S. economic activity. The Philadelphia Fed, one of 12 regional Fed banks, serves Delaware, eastern Pennsylvania and southern New Jersey.

[Starwind]

The optimism is based on the 6-month outlook, i.e. the oft repeated 'recovery in the second half'.

See below.

[Starwind]

UPDATE - INSTANT VIEW-Philly Fed survey -8.8 in April
Thursday April 17, 12:12 pm ET

NEW YORK, April 17 (Reuters) - The following are comments from U.S. market analysts on Thursday after the Federal Reserve Bank (News - Websites) of Philadelphia's April manufacturing business outlook survey said its index was -8.8.

Economists polled by Reuters before the New York Fed issued its Empire State survey of the same sector had estimated on average that the Philadelphia survey would read -4.9, after a March reading of -8.0. But when the April Empire State survey was released on Tuesday, most economists concluded that the Philadelphia survey would produce a more negative reading than they had first forecast.

JOSEPH KEATING, CHIEF INVESTMENT OFFICER, AMSOUTH ASSET MANAGEMENT, BIRMINGHAM, ALABAMA:

"The basic way I'm looking at a lot of the data being reported right now is that it needs to ignored because it's prewar data, and we really need to be thinking about the future economy that's going to unshackled from the uncertainty of war as opposed to prewar data that clearly had a wet blanket laid over it from the uncertainty.

"You can be misled if you extrapolate some of the economic gloom that was prevalent in the economy during February and March that is coming out in some of current data in terms of what the economy is going to look like later on in the year.

"Let's face it. During the build-up there was a lot of watching and waiting rather than spending and hiring going on within the business community. Business leaders couldn't evaluate the return on investment on either physical or human capital, as well as in building inventories. That's going away.

"Then you throw in fiscal stimulus that's coming, irrespective of what type it is. We're going to get something. I think it all points to a better outlook for the economy on a go-forward basis."

MITCH STAPLEY, CHIEF FIXED INCOME OFFICER, FIFTH/THIRD INVESTMENT ADVISORS, GRAND RAPIDS, MICH.:

"It was not as bad as expected. We were set up for a disappointment. But any jubilation in the equity market is being constrained by the very ugly initial jobless claims data that came out this morning.

"The economy continues to be incapable of generating any job growth. Against that kind of backdrop, a mildly positive Philly Fed report is not going to generate much enthusiasm."

JADE ZELNIK, CHIEF ECONOMIST, RBS GREENWICH CAPITAL MARKETS, GREENWICH, CONN.:

"It held up surprisingly well in relation to the deterioration of (the) Empire State survey. To the extent Philadelphia Fed survey is conducted early in the month it may only reflect conditions in March.

"The ISM survey conducted somewhat later could include somewhat more information on April activity. "These results leave room for a modest improvement in the ISM index."

PATRICK FEARON, ECONOMIST, A.G. EDWARDS & SONS, ST. LOUIS, MISSOURI:

"Of course the current conditions part of this index shows a continued decline in April, but I'm encouraged by the fact that the future-looking portion of this report has remained strong. There's a huge disparity between the companies' views of current conditions and their views of likely conditions in the future.

"This is actually an encouraging report if you take into account the six-month forward forecast. In fact, the report has a very important statement here saying that the future indicators suggest a 'fairly high degree of optimism' and that could mean that business spending, including business hiring, might be improving in the coming months."

TIM MAZANEC, SENIOR CURRENCY STRATEGIST WITH INVESTORS BANK & TRUST, BOSTON:

The Philadelphia Fed reading "was pretty much spot on the consensus. The Empire State reading the other day had led us to believe that today's reading could have been far worse than expectations: so this isn't that bad."

"The knee-jerk reaction is definitely for a little bit of a stronger dollar, but (the dollar could remain) within the range for the rest of day." But "sentiment about the U.S. economy remains poor and does not change the trend for a weaker dollar going forward."

[Starwind]

And here is the actual Philadelphia Fed April 2003 report:

Business Outlook Survey
April 2003

The region's manufacturers report weaker activity for the second consecutive month. Indexes of general activity, new orders, and shipments all declined this month. Firms surveyed also reported declines in employment. The manufacturers reported increases in input prices again this month, and a growing percentage reported higher prices for their own manufactured goods. Despite the current weakness in manufacturing, most future indicators, which reflect expectations for the next six months, suggest a fairly high degree of optimism.

Current Indicators Show No Improvement

The survey’s broadest measure of manufacturing conditions in the region, the index of general business activity, declined slightly this month. This represents the fourth consecutive monthly decline in the index and the second consecutive month it has been below zero (see Chart). This is also the first time since December 2001 that the index has remained negative for two consecutive months. The recent weakness in manufacturing is also reflected in the U.S. industrial production index for manufacturing, which registered declines in the most recent two months available (February and March).

Both the current new orders index and shipments index recorded notable declines this month. The new orders index fell almost 7 points, after falling more than 18 points last month. In response to special questions this month, 25 percent of the firms reported declines in new orders attributable to the beginning of the war (see Special Questions). Of those reporting some effects of the war on new orders, more than three-quarters reported that the declines were slight or moderate, but 14 percent indicated that they were substantial. The shipments index fell below zero for the first time since December 2001. Negative indexes for delivery times and unfilled orders confirm the weakness in manufacturing. The unfilled orders index fell to its lowest reading in six months.

Some Higher Prices Reported

The manufacturing firms surveyed reported continued increases in the prices of inputs this month. But the current prices paid index, which reached its highest reading in 29 months in March, moderated slightly in April. About 29 percent of the firms reported higher input prices this month, which is only slightly lower than the 31 percent that reported higher prices in March. Although the recent rise in the prices paid index is largely due to the rise in energy prices, other prices are rising as well. Thirty-four percent of the firms in our survey reported that average prices of non-energy materials have risen since the beginning of the year (see Special Questions).

There was a notable rise this month in the prices received index, which turned positive again after a negative reading in March. This month’s prices received index is at its highest reading in two years. Nevertheless, a small percentage of the firms surveyed are still experiencing price declines for their products, and 76 percent of the firms reported that the prices of their manufactured goods were steady.

Looking ahead, firms expect a continuation of higher costs over the next six months. But the future prices paid index fell substantially after reaching its highest reading in two and one-half years last month. The decline probably reflects expectations of a fallback in energy prices. The future prices received index, however, remained near its reading last month, with nearly 30 percent of the firms expecting increases in the prices of their manufactured goods over the next six months.

Expectations Are Little Changed And Optimistic

Despite weaker manufacturing conditions in April, expectations remain optimistic and have changed little from the previous month. The future general activity index, which increased substantially from February to March, declined only slightly this month (see Chart). The percentage of firms expecting increases in activity over the next six months (59 percent) is significantly greater than the percentage expecting declines (13 percent). Indicators for future shipments and new orders increased slightly this month.

Forecasts for employment also improved this month. The future employment index recorded its best reading in five months. On balance, firms expect average work hours to increase over the next six months. The future capital spending index moderated slightly in April, but its current reading (17.6) is slightly above its average of the past 12 months.

Summary

The regional manufacturing sector continued to weaken in April, as evidenced by negative readings of the activity, new orders, shipments, and employment indexes. Pressures continued on input prices but moderated slightly from the previous month. More firms reported increases in their own manufactured goods prices this month. Despite the current weakness, manufacturing firms continue to anticipate increases in activity over the next six months, and their employment plans improved this month.Special Questions (April 2003)

Have you experienced declines in new orders attributable to the beginning of the war?
Yes	25%
No	75%

If yes, have declines been:
Slight	29%
Moderate	48%
Substantial	14%
No response	9%

On average, prices for non-energy materials since the beginning of the year have:
Decreased	2%
Not changed	64%
Increased	34%

Accompanying Table (html table)

Text version

Release, Tables, and Chart (pdf format)

April 2003

                     April vs. March          |        Six Months from now
                                              |                vs. April
                                              |
               Prev.                          |  Prev.
               Diff.  Inc. No ch. Dec. Diff.  |  Diff.  Inc. No ch. Dec. Diff.
               Index                   Index  |  Index                   Index
                                              |
General Busines  -8.0  19.5  52.1  28.3  -8.8 |    46.4  59.0  24.2  13.2  45.8
Conditions                                    |
                                              |
New Orders       -4.3  22.1  44.7  33.2 -11.2 |    45.4  59.6  22.5  10.7  48.9
                                              |
Shipments         0.9  26.8  40.7  32.5  -5.7 |    42.5  56.2  24.7  13.1  43.1
                                              |
Unfilled Orders  -9.5  12.8  55.0  31.8 -19.0 |    12.3  28.2  55.5  12.5  15.6
                                              |
Delivery Times   -5.5   9.0  72.7  15.1  -6.1 |     6.5  14.9  70.4  10.0   4.9
                                              |
Inventories     -10.5  21.6  53.8  24.2  -2.7 |     6.7  18.8  54.9  22.3  -3.5
                                              |
Prices Paid      25.1  29.2  63.6   6.4  22.8 |    43.1  28.2  55.0   7.8  20.4
                                              |
Prices Received  -6.2  16.0  76.0   8.0   8.0 |    19.3  29.5  57.5   8.8  20.7
                                              |
Number of Emp.   -8.8   5.1  77.3  17.6 -12.5 |     6.5  26.8  58.5  10.2  16.6
                                              |
Avg. Emp. Wrkwk -12.4  16.5  60.7  22.9  -6.4 |    10.4  20.2  62.5  10.0  10.2
                                              |
Capital Ex.       --    --    --    --    --  |    20.5  24.9  46.8   7.2  17.6


Notes: (1) Items may not add to 100 percent because of omission by respondents.
       (2) All data are seasonally adjusted.
       (3) Diffusion indexes represent the percentage of respondents indicating
           an increase minus the percentage indicating a decrease.
       (4) Survey results reflect data received through April 10, 2003.

[Starwind]

Fyi...

[Steven W.]

Another hint - instead of macroizing these kinds of wide area reports you should focus on earnings power for individual companies of choice, many of which, over the past days, have demonstrated they're continuing to produce good profits. In other words, seperate the wheat from the chaffe, unless your objective is gloom & doom style pump & dump.

[MonroeDNA]

Go here:

http://www.freerepublic.com/focus/f-news/finduser

Type in Starwind, and search. You will find a bunch of negative economic postings by this person.

"Doom & Gloom Pump and Dump" is absolutely correct.

There are a small handful of Freepers who do this continuously. Willie Green and Sarcasm are two more. Sometimes I get the feeling that there are only one or two, with a hidden agenda, and multiple "sleeper freeper" accounts & names.

[arete]

There are a small handful of Freepers who do this continuously. Willie Green and Sarcasm are two more. Sometimes I get the feeling that there are only one or two, with a hidden agenda, and multiple "sleeper freeper" accounts & names.

I post negative (but real) articles about the economy day after day and I don't even make your list. That's an insult!

Wake up and smell the coffee. The economy is in the toilet and no matter how far you bury your head up your, oops -- bury your head in the sand, it doesn't change that fact.

Richard W.

[Starwind]

MonroeDNA: negative economic postings

So you expect instead the inummerable reports I overlooked showing a declining trade defict, declining Fed budget deficit, strengthening dollar, balanced Fed and State budgets, growing consumer confidence, increasing manufacturing utilization, growing service sector (beyond burgers & fries), growing employment, growing GDP, decreased consumer debt, decreased bankruptcies, improving global economy for our trading partners... those reports?

Steven W. earnings power for individual companies of choice

So you'd like me to ferret out for you the majority of companies now reporting positive earnings at raised guidance, increased capex, funded pension plans and expensed ESOPS, increased revenue on increased sales (not just acquisitions and forex differentials), reduced inventories, reduced debt, better dividends, increased pricing power, increased hiring, confident outlook for the next quarter (not some vague next half) with concensus of analysts agreeing,...those companies?

Instead of whining that my posts don't conform to your view of the economy and earnings, why don't you post some that do?

Put up or shut up.

(and it's usually polite poster etiquette to copy the poster's you're slamming, so they know - unless of course you lack the integrity to stand behind your accusations - thank you Richard)

[Steven W.]

I will only do this once since you're incapable of doing any homework but there are lots of them - check out UTX today, increased profits & earnings + raised quarterly dividend again. It's been a great long term performer, well diversified & persistent performance even with shortcomings in the aerospace arena. Evaluation has been pretty high of late (P/E = 12) but for those buying in bulk last summer @ PE ~ 7 it's frequently a good long term investment to average in on & an historically high performer during periods of improving economics and always maintains profitability during down times with exceptionally clean balance sheet.

[Steven W.]

They are goldbugs. Since the mid-20th Century the uses for gold have decreased significantly and the only real value it retains much anymore is as a hedge against uncertainty. Thus the only advantage people have who invest in gold is to do all they can to sow fear in the marketplace and, with decreasing uncertainty, after the war, gold has been taking hits down to its supporting levels and the frequency & absurdity of their gloom & doom posts is directly proportional to the fear they sense from an inability to control the price of an otherwise useless commodity and their further inability to analyze and identify true quality investments. They critize the scumbag stock analysts who were guilty of pump & dump schemes in the 90's while they perpetuate the same or similar themselves. Obviously economics moves in cycles and there's nothing worse for gloom & doomers than any possible perception things could ever possibly get better out there.

[Starwind]

check out UTX today

UTX today:

UTX 3 Years:

Large companies with the most underfunded pension plans, past three years

Company	Symbol	Amount underfunded ($ million)	Amount underfunded as percentage of assets
Avon Products	AVP	-282.8	9%
United Technologies	UTX	-2,329.0	9%
Imperial Oil Limited	IMO	-538.7	8%
3M	MMM	-990.0	7%
FedEx	FDX	-717.0	5%
Exxon Mobil	XOM	-7,249.0	5%
Harley-Davidson	HDI	-160.6	5%

Note UTX has one of the worst pension funding liabilities. Not my definition of a good investment, nor is it in a sector where I well understand the underlying product/service and marketplace. Don't bother doing my homework for me, you'd do better tending to your own.

As I've told you 3 times now, I'm 100% cash, looking for an entry, short on an overvalued weak stock in a bear market, or long on an undervalued strong stock in a bull market (or bear market rally). I have no gold, oil, or axe to grind.

That you can't remember that, or believe I'm lying, bodes poorly for constructive conversation, and I'll not waste any further keystrokes on you.

[arete]

Well said -- very well said.

Richard W.

[MonroeDNA]

"The economy is in the toilet and no matter how far you bury your head up your, oops ..."

The Dow went up 1-1/2% this week, and the NASDAQ close to 5%.

The economy is doing fine. We increased our own staff 25% over the past 7 weeks, and my 401k is doing fine.

You're Tom Daschle, right? P.S., see tagline.

[JNB]

Good profits? Revenue growth is down, in the case of IBM, its profits were down and its revenue growth only grew because it bought out Price Waterhouse. Profits have been maintained only because of cost cutting, and cost cutting only results usually in one time gains. As for the markets themselves, who would have ever though the VIX would be below 25 with the DOW down in the 8300 range, and the VXN down to mid 30s with the Nasdaq still in the low 1400s, the lowest its been since the peak of the bubble.

[JNB]

Yes, the good news is Nasdaq is up to 1425, the bad news, it first reached this level almost 7 years ago.

[MonroeDNA]

"Instead of whining that my posts don't conform to your view of the economy and earnings, why don't you post some that do?"

Because this board is not mainly about debate between the doom-and-gloom crowd and those of us that are making more and more money every day. See the home page.

Keep trying to hijack this board, to suit your personal agenda, though. Eventually you will get the message.

[MonroeDNA]

"...and it's usually polite poster etiquette to copy the poster's you're slamming, so they know ..."

You are absolutely correct, and I appologize. Breach of forum.

[MonroeDNA]

"They are goldbugs....

Actually, if you do searches, you see a pattern.

They want stronger unions, higher wages for workers, hate capitalism, hate free trade, and encourage class warfare, through trying to stir envy over executives' salaries. You expect sometimes, a following statement: "Workers of the world, Unite!"

Any historical figure you can think of that did this?

A few come to mind:

Marx.

Stalin.

Castro.

Chavez.

I just got done reading "Reagan's War," a great book about how he started fighting communists in Hollywood in the early '40's. He said you could recognize them most quickly by their statements and tactics.

[MonroeDNA]

Buy Novoste.

[Starwind]

Keep trying to hijack this board, to suit your personal agenda, though. Eventually you will get the message.

When either Jim Robinson or the Mod's advise that I'm violating an FR policy, I'll correct my posting. Til then my posts are sourced, uninfringing, in the business topic, germane to current discussions, and civil without personal attacks.

As previous pointed out to you, if you think you know other news reports that present your personal view of the economy (and your personal company and your personal 401K) post them and quit whining about what others choose.