Posted on 04/17/2003 9:43:04 AM PDT by 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.
See below.
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."
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 surveys 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 months 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)
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.
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.
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)
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.
Richard W.
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.
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.
You are absolutely correct, and I appologize. Breach of forum.
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.
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.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.