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Factories can’t run without fossil fuel feed stocks.Which is why oil market guru Stephen Schork leads off his Monday note explaining his jaundiced view that Superstorm Sandy alone caused October manufacturing data to fall off.
… the U.S. factory complex has now failed to grow or has contracted in five of the last eight months.
Yet, in spite of the dismal track record of the previous seven months, somehow, as the Fed claims below, the contraction in economic growth for October was all the fault of Hurricane Sandy.
Industrial production declined 0.4 per cent in October after having increased 0.2 per cent in September. Hurricane Sandy, which held down production in the Northeast region at the end of October, is estimated to have reduced the rate…
Federal Reserve Bank
November 16, 2012
Hmm, a storm which did most of its damage in 2 states (New Jersey and New York) beginning on the third to last day of October, was responsible for pulling the nation’s entire manufacturing base negative for the month?
Never mind that the Fed’s numbers are seasonal adjusted, i.e. they are numerically manipulated to weigh exogenous factors (e.g. hurricane related disruptions). For whatever reason, even though Sandy hit while 28/31st’s of production for October was already booked, the contraction was all the fault of Sandy.
The takeaway, Schork says. is that November data is likely to be even worse.
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