The Philly Fed manufacturing survey did not follow the big upside in the NY data, coming in .5 point less than expected at 11.5 and it fell from the Sept level of 14.1. It is though positive for a 3rd month for the first time since ’07. There was improvement in three key components, New Orders rose 3 pts to 6.2, the highest since Dec ’07, Employment rose to -6.8 from -14.3, obviously still weak but the least so since Sept ’08 and backlogs rose 6 pts to -1.3. Inventories surprisingly fell though sharply to -31.8 from -18.1 and that contrasts with the hoped for inventory build story but the NY survey saw a rise in this category. Prices Paid and Received both moved higher. Also in difference to the NY survey, the 6 month outlook fell 8 pts to the lowest since April. Again, the Philly and NY surveys have proven to be uncorrelated and thus leaves us more confused but the trend is up and the ISM will reconcile the degree of improvement.
