In stark contrast to a near tripling in the NY mfr’g survey, the May Philly mfr’g report went from +8.5 to -5.8, well below expectations of +10 and the weakest since Sept ’11. The components confirm the headline weakness (headline not a sum of its parts) as New Orders fell to -1.2 from +2.7, Backlogs fell to -9.4 from +3.2 and importantly, Employment fell to -1.3 from +17.9. The Avg Workweek also dropped to -5.4 from -2.3. Inventories were down to 4.5 from 8.2. Prices Paid fell sharply to +5 from +22.5 to the lowest since July ’09. Prices Received went negative to -4.5 from +9.4. The Business Activity 6 month outlook was also disappointing as it fell to +15 from +33.8, the lowest since Aug ’11. Bottom line, with the 1st two May industrial reports telling much different stories (NY maybe positively influenced by tech and Philly likely more impacted by old line manufacturing), we’ll have to wait to see more regional survey’s to get confirmation of direction but obvious to all is a European slowdown, Asia moderation and mediocre US growth that may start now being reflected in the upcoming economic data points.
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