The Nov NY manufacturing survey fell sharply to -11.1 from 15.7 and was well below expectations of 14.0. It reflects a contraction for the 1st time since July ’09 but paradoxically, the 6 month outlook rose almost 15 pts to 54.6, the best since April. New Orders fell a huge 37.3 pts to -24.4 and Order Backlogs fell to -24.7 from -1.7. Employment fell to 9.1 from 21.7 and the Average Workweek fell to -13 from +3.3. Inventories rose to zero from -11.7. Notwithstanding the sharp rise in commodity prices, Prices Paid fell 8 pts to 22.1 and Prices Received fell 10 pts to -2.6. Bottom line, it’s tough to have a bottom line because of the very wide discrepancy between the current Nov reading and what mfr’s think about the future. Let’s wait to see the Philly survey on Thursday before jumping to any conclusions yet about Northeast manufacturing.
Oct Retail Sales rose 1.2% m/o/m, almost twice estimates of up .7% and mostly due to a 5% rise in auto’s/part sales. Taking out volatile auto sales and inflation induced gasoline station sales and the figure was up .4% vs the consensus of up .2%. Core sales, which are ex auto’s, gasoline, and building material’s, were up .2%. Sales gains were also seen in clothing (cotton inflation induced?), food/beverage (food inflation?), sporting goods, online retailers, and restaurant/bars. Furniture and electronic sales fell. Bottom line, sales continued to show gains as Oct is sort of the midpoint between back to school and the holiday season. Job gains and income growth are the key factors in the level of spending we will see and both have been improving, albeit not as fast as we would like. Also, higher commodity prices filtering into the cost of goods will have to be weighed against providing value to the consumer and the tradeoff will be key to watch.