US: Conflicting signals from manufacturing surveys - Nomura

Analysts at Nomura note that in the US, the Empire State and Philly Fed manufacturing surveys sent conflicting signals in November.

Key Quotes

“The Empire State general business conditions index increased 2.2pp to 23.3, above expectations (Nomura and Consensus: 20), suggesting steady manufacturing momentum in New York.”

“The new orders and shipments indicators both remained elevated while labor indicators improved notably (number of employees up 5.1pp to 14.1 and average workweek up 9.0pp to 9.2).”

“In contrast, the Philly Fed survey showed a noticeable decline in manufacturing activity during November with the headline index dropping 9.3pp to 12.9. The new orders subindex deteriorated while shipments remained elevated, suggesting some weakening in near term momentum.”

“The forward looking indicators across both surveys also sent conflicting signals. However, capital expenditure expectations improved strongly in both surveys during November (+8.8pp to 24.8 in Empire, +10.9pp to 36.1 in Philly), a positive sign after weakening capital expenditure plans across a number of regional business surveys.”

“Finally, special questions from the Philly Fed survey on pricing power and expected wage growth suggest no material changes since August 2018, indicating that despite escalating trade tensions and further tightening in the labor market, manufacturers in the region do not expect a material change in the trajectory of price or wage inflation.”