Economic data

The June NY manufacturing survey at 19.6 was about in line with expectations and little changed from May’s # of 19.1 but remaining at a still good level. New Orders rose 3 pts but after falling by half in May. Backlogs rose by 6 pts but remained negative at -1.2. The Employment component fell by 10 pts, matching the lowest since March but it’s just back to the 6 month avg. After 4 positive readings, Inventories went slightly negative at -1.2. Following the selloff in commodity prices, Prices Paid fell to 27.2 from 44.7, the lowest since Dec. Prices Received fell a touch to 4.9 but to the lowest since Feb. The 6 month Business Conditions outlook fell slightly to 40.7 from 42.11, to the lowest since July ’09. Net-net, NY is the first of many regional manufacturing surveys, ultimately summed up by the ISM and the lack of an export orders component in today’s data means we need to see more surveys to get a broader gauge of manufacturing but today is off to a good start.

Looking forward over the next few months in terms of import price inflation, there are two factors to keep a watch on. First is what impact the US$ strength will have in keeping import prices in check and secondly, what impact, if any, will the rise in the wages of Chinese manufacturing employees have on Chinese manufactured goods. May Import Prices, ex all fuels rose, rose by .5% m/o/m and is up 3.6% y/o/y. Headline prices fell .6% m/o/m (half expectations of a drop of 1.2%) but are up 8.6% y/o/y. Thus, the strength of the US$ is not showing yet any influence on keeping import prices contained but it should if the strength is sustainable. Also of note, import prices from China rose .3% m/o/m, the biggest gain since Aug ’09 and with the daily stories of higher wages in China, the trend bears watching.

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