The market has totally ignored this morning’s disastrous Empire Manufacturing Survey, which showed a big collapse in new orders.
On the one hand, you don’t want to ignore dramatic reversals in the data, but there are some reasons to think it’s not that big of a deal.
First of all, these regional economic surveys are notoriously volatile, and New York isn’t known for its manufacturing economy.
What’s more, the survey consists of just 200 surveys sent out on November 1 (see here), and only about half are ever returned, and that’s in 10 days.
So we’re talking about 100 respondents over 10 days in New York. Not a massive sample size by any stretch (and yes, we know that’s how it’s ALWAYS done with this survey, but the shocking number and the fact that the market is ignoring the number is what prompted us to look into this).
Also bear in mind, that of this ~100 respondents the percentage who saw lower sales went from 22.7 to 38.6, so we could be talking as few as 14 executives.
Beyond that, as we noted earlier, the medium-term business outlook among respondents responded a lot. So whatever sales decline they saw did not prompt them to ratchet down expectations, or even hiring plans… at all.
We get Philly Manufacturing on Thursday, which might help confirm or reject Empire, but for now it’s not absurd that markets are dismissing this.
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