by Mish

Let’s investigate the divergence between the Dallas Fed Manufacturing Surveyand the Chicago Fed National Activity Index.

Dallas Fed Manufacturing Production

The survey states “Texas factory activity continued to increase in September. The production index, a key measure of state manufacturing conditions, edged down to 19.5 from 20.3 in August, indicating output grew at about the same pace as last month.”

Econoday offers this blurb:

Hurricane Harvey didn’t slow down Texas manufacturing at all based on the Dallas Fed’s September report which is led by a strong 4.3 point gain in the general activity index to 21.3 for the best result in 7 months. Readings throughout the report are far above zero to indicate robust month-to-month growth: production 19.5 in September vs 20.3 in August, new orders 18.6 vs 14.3, hours worked 18.4 vs 14.4.
Employment is a special highlight, at 16.3 vs 9.9 to indicate the sharpest rate of hiring in nearly 3-1/2 years. There is an indication of price pressures likely tied to Harvey and its effect on petroleum costs as prices paid rose to 34.9 vs 26.9 for the highest reading since July 2011.

Chicago Fed National Activity Index

Image placeholder title

Chicago Fed National Activity Index 3-Month Moving Average


Image placeholder title

Econoday Comments:

Hurricane Harvey made its effects felt in the national activity index which fell to minus 0.31 in August for the weakest showing since August last year. The 3-month average fell to minus 0.04 for only the second negative score this year. Negative readings in this broad composite are consistent with subpar economic growth.
Negative pull came especially from the production component as industrial production, hit by Harvey dislocations, showed declines for all 3 components — manufacturing, mining and utilities. Also weak was personal consumption & housing with retail sales pulled down by weak auto sales, another likely Harvey effect centered in Houston, and also housing starts where the South showed sharp Harvey-related effects.

Texas Refineries Shut

Image placeholder title

Did! Did Not!

There you have it, folks. Hurricane Harvey was very disruptive nationally, just not in the Dallas Fed region.

This curious statistic is despite the fact that Dallas Fed region refineries and chemical production plants were shut down for lengthy periods.

Mike “Mish” Shedlock

Philly Fed, Another Strong Regional Activity Report: Why Doesn’t Factory Data Match?

The Philadelphia Fed Business Outlook Survey of manufacturing activity has been in positive territory for eight months. New orders are up, unfilled orders are up, Employment is up, and work hours are up.

Hurricane Harvey Ripple Effects: Assessing the Impact on Housing and GDP

Black Knight reports Hurricane Harvey could Lead to 300,000 new mortgage delinquencies. How does this compare to Katrina? And what about GDP?

Chicago National Activity Index Surprises Economists With Negative Reading

Economists predicted a strong July reading for the Chicago Fed National Activity Index. What they found was a slightly negative reading of -0.01 vs an Econoday consensus estimate of +0.22.

Cracks Appear in Philadelphia Fed Regional Manufacturing Report

Actual industrial output has been far weaker than the regional Fed manufacturing reports and the ISM report for at least a year.

Investigating Curious Anomalies in GDPNow and Nowcast GDP Estimates

As of last Friday, the Atlanta Fed GDFPNow model for the second-quarter GDP stood at 3.4%. In contrast, the FRBNY Nowcast report was 2.2%.

Durable Goods Order Jump Led By Autos: Positive Hurricane Impact?

The Census Bureau reports “New orders for manufactured durable goods in August increased $3.9 billion or 1.7 percent to $232.8 billion, the U.S. Census Bureau announced today.

Wholesale and Retail Inventories Jump, Trade Deficit Improves Slightly: GDP and Hurricane Impact?

The Census Bureau’s Advance Economic Indicators show a slight improvement in exports and rising retail and wholesale inventories.

Empire State Manufacturing: Another Strong Regional Report Bearing Little Resemblance to Reality

I have not commented on the regional manufacturing reports much lately because they bear no resemblance to reality.

Dallas Fed Manufacturing Production Plunges Again, Overall Activity Down 17 Straight Months

The rise in oil prices from below $30 to near $50 was supposed to light a fire on manufacturing in the oil producing states. It didn’t.