Image Source: Pexels

Although the federal government has resumed reporting economic data, it is spotty and woefully stale, from August and September. As a result, the two big sources for current data remain the regional Feds and the ISM surveys. The latter will be reported next week for November, but all five regional Feds surveys of both manufacturing and services conditions have been reported. While they certainly aren’t perfect (to begin with, they are diffusion indexes rather than absolute numbers; and do not cover all ten regions), they provide a good sketch of current conditions in both economic sectors.

Last month they showed an upward trend in both manufacturing and services production and new orders, but Prices paid were increasing broadly, with prices received also increasing, but less broad. Finally, employment was at a standstill or worse. The only significant difference between the two sectors was the perception that manufacturing conditions were positive, and services negative. This month continued those trends.

Let’s take each sector in turn.

Manuacturing

The below chart includes, in order, NY, Philadelphia, Richmond, Kansas City, and Texas. Month over month changes are in parentheses, with the absolute values for November following. The final number is the average change and absolute number for all 5 together.

Regional Fed: NY. PHL. RVA. KC.  TX.  Avg

Headline: (+8) 18.7; (+11.1) -1.7; (-11) -15; (+2) 8; (+15.3) 20.5; (+1.2) 4.7  

New Orders (+12.2) 15.9; (-26.8) -8.6; (-16) -22; (-3) -2; (+3.1) 4.8; (-1.4) 1.6 

Prices Paid  (-3.4) 49.0; (+6.9) 56.1; (+1.0) 6.8; (-5) 36; (+1.9) 35.3; (+7.6) 36.6 

Prices Rec’d (-3.2) 24.0; (-9.1) 17.7; (+0.1) 3.1; (-6) 13; (+3.1) 7.7; (-3.0) 13.7

Wages* (n/a) n/a; (n/a) n/a; (+9) 24; (n/a) n/a; (+1.2) 14.2); (+5.1) 19.7

Employment  (+0.4) 6.6; (+1.4) 6.0; (+3) -7; (+10) 11; (-0.8) 2.0; (+2.8) 3.6

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* only 2 of the banks report this information

On Wednesday durable goods and core capital goods orders were reported for September, showing the second highest levels for both since the pandemic:

(Click on image to enlarge)

This confirmed the upswing we already saw in the regional Feds at the time. The above chart suggests that the improvement has continued since then. FRED does cover the NY, Philly, and Texas manufacturing surveys. Here is the average of the headline number for the three:

(Click on image to enlarge)

Next, here is the Services sector:

As with the manufacturing chart above, month over month changes are in parentheses, showing momentum (the 2nd derivative), with the absolute diffusion values for November following. The final number is the average change and absolute number for all 5 together.

Regional Fed: NY. PHL. RVA. KC.  TX. Avg

Headline:  (-2.3) -21.7; (+5.9) -16.3; (-14) -15; (-2) -7; (+7.1) -2.3; (-1.1) -12.5   

Cap Ex (+22.9) 16.3; (-11.3) 6.2; (-4) -3; (-19) -5; (7.4) 13.2; (-0.8) 5.5

Prices Paid  (-4.5) 61.9; (-1.1) 34.7; (-0.7) 4.8; (-3) 32; (+4.6) 27.6; (-1.0) 32.2

Prices Rec’d (-6.3) 20.1; (+9.1) 22.0; (-0.7) 3.1; (-7) 14; (+0.7) 6.5; (-0.6) 13.1  

Wages (-0.5) 25.4; (+11.0) 49.3; (-5) 12; (+3) 24; (+4.0) 14.7; (+2.5) 25.1 

Employment (-3.4) -8.6; (+3.0) 2.5; (+1) 1; (-12) -16; (+8.9) 3.1; (-0.4) -3.6

The only trend that showed month over month improvement was in wages. All other measures - headline business conditions, capex, prices paid and received, and employment - softened. At the same time, only the headline business conditions sentiment and employment were negative.

When we examine both the manufacturing and services sector in full as reported by the regional Feds in November, we see expanding manufacturing and services capex, but a divergence in the headline numbers. Prices paid continue to show widespread inflation, on some of which is being recovered as pass-throughs to consumers. And while wage growth remains strong, employment averages to flat at best.

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