Monday, September 15, 2014
Surveys vs. Hard-Data
Industrial production in the US came in below expectations for the month of August (-0.1% vs consensus estimate of 0.3%) and Capacity Utilization fell to a six month low . Meanwhile, the Empire State Manufacturing Survey surged past expectations for the September (27.5 vs consensus estimate of 15.9). While we are not trying to make a mountain out of a molehill, recently there seems to be a disconnect between the hard data (today's IP and capacity utilization report, nonfarm employment, mortgage applications, jobless claims) and the multi-year highs in the surveys (today's Empire State Manufacturing Survey, ISM manufacturing, ISM non-manufacturing, Markit's PMI survey and Markit's Services survey). Perhaps the surveys are leading indicators and the economy is on the precipice of stronger growth. Or perhaps the surveys are overstating growth prospects and the underlying economy is weaker than most believe. Unfortunately, as with most questions in economics, the answer probably lies somewhere in between and only time will tell which data points were more prescient. However, it is something that we are keeping a close eye on at the moment. A few interesting charts of the today's US data releases are below.