The Jan Philly Fed manufacturing index was 15.2, almost 3 pts below expectations and down from 22.5 in Dec. The components were mixed. New Orders fell 5 pts to 3.2 but Backlogs rose almost 2 pts to 3.6. Employment rose slightly to 6.1 from 4.5. Inventories remained negative but much less so as it rose to -1.6 from -5.7 and now is near the best level since Nov ’07 and provides more evidence that it is predominantly the inventory part of the equation that is boosting economic activity for now. Prices Paid remained elevated but fell 3.4 pts. Prices Received rose to the highest since Oct ’08 at 1.4, positive after 13 months in a row of negative readings. The 6 month outlook rose to 43.3 from 35.9 and back in line with the 6 month average. Today’s below expectations figure follows the better than estimated NY survey and shows that while things are getting better in manufacturing, the process is still bumpy.
