Richmond Fed Manufacturing Index Record Plunge Coupled With Twilight Zone Hiring

The Richmond Fed manufacturing index plunged 22 points, the most on record. Employment stats are from the Twilight Zone.

I stopped posting the Fed regional reports because diffusion index have huge problems and there are a built-in survival and reporting bias issues as well.

The December Richmond Fed Manufacturing Report contains some interesting stats this month, so let's take a look.

Richmond Fed Activity Components

Key Activity Index Stats

  1. Shipments -25
  2. New orders -9
  3. Order Backlog -18
  4. Local business condition -25
  5. Finished goods inventory +13

Twilight Zone Employment

  1. Number of employees +14
  2. Average workweek +3
  3. Availability of skills -28

Shipments crashed, inventories are up, new orders are down, business conditions are terrible, and there are no skilled workers available to hire.

Yet, supposedly, employment and the average workweek are up.

I suspect diffusion index magic, something like this: A handful of companies hired one or two more workers, offsetting those who fired hundreds because by diffusion magic, 1=100. 1 also equals 200, 500, and 33.

Diffusion indexes measure direction, not amount. Thus, one company firing 100 and another hiring 1 nets to zero.

Mike "Mish" Shedlock

Comments
No. 1-5
Casual_Observer
Casual_Observer

The consumer is getting close to tapped out again after this bump in the economy. When most do their 2018 taxes they will realize the tax cut was already spent in 2018.

thimk
thimk

what caught my eye is the shortage of skilled workers.what a travesty. Paging Mike Rowe.

Sechel
Sechel

Reaction to Trump's trade war?

AWC
AWC

Confusion index aside...

AWC
AWC

Relax, it can only go up from here. Besides, The Donald has his very own PPT, and he's not afraid to use it ;-)