I read an interesting article by Jill Mislinski on AdvisorPerspectives.com. The article was titled "Empire State Manufacturing Declined for Fourth Consecutive Month." The takeaway from the article is that US Manufacturing is slowing at a rate not seen since the last two recessions: 2001 and 2008.
US Manufacturing Data
There are five regional US manufacturing reports released every month: Empire State, Philadelphia, Richmond, Kansas City, and Dallas. The regional data does tend to fluctuate, so it is advisable to calculate an average of the five regional reports. As the author notes, it is also useful to calculate three-month moving averages to further smooth the data.
As of October 2015, the three-month moving averages for all five regions were negative. In addition, the most recent average value of the five regional moving averages was -6.7. This was (by far) the lowest average regional value experienced outside of a recessionary environment since the inception of the data series (2001).
The charts and data in the article are very compelling. Given the continued strength of the US Dollar, the picture is not going to get brighter for US manufacturing any time soon.
US Manufacturing is slowing at a rate not seen since the 2001 and 2008 recessions. Evidence indicates that China's economy is shrinking and emerging markets are all suffering. It has already been reported that Canada was in a recession and now Japan is as well.
The canaries in the coal mine are dropping one by one, but the equity market is not worried: the S&P 500 Index was up 1.62% today. Stay tuned.
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