Photo: Bloomberg Television
Last week, markets were hit by two surprisingly contradictory reports: the Empire and Philadelphia Fed manufacturing reports.The two, which are based on the exact same methodology, showed substantive differences.
Ed Yardeni, President of Yardeni Research was puzzled by the reaction the Philly Fed report, which sent markets lower.
“I’m not sure why this survey gets more attention than the other regional surveys, conducted by the Fed banks in Dallas, Kansas City, New York City, and Richmond,” he said. “It’s probably because the Philly survey is among the first to come out. However, New York’s survey for May was released on Tuesday, and it was surprisingly strong.”
Anyways, Yardeni dismisses last week’s fluke, suggesting that the surveys should not be looked at separately.
Both the Philly-Fed and NY-Fed survey results are extremely volatile. They are less so when they are averaged together. When I do so for general business conditions, new orders, and employment, the May averages are down from April, but remain solidly in positive territory.
Yardeni averaged key outputs from the two reports, which showed still positive business conditions.
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