As we all witnessed, the U.S. has been calm for a while. However, this week was the week it chose to stand up out of the crowd as data was flowing showing positive signs before the Fed Chairman Mr. Ben Bernanke testifying at a press conference yesterday where many interpreted that there will be a rate cut some time soon and that downside growth to risks remain.
The US released the Empire Manufacturing Index for the month of February coming in at a surprising -11.7 compared to the expected reading of 7.9 and the previous reading of 9.
Well this level is the lowest in almost four years after the index had fallen nearly 21 points. The survey entered a negative territory as new orders for February collapsed for a fourth straight month losing 11 points to reach 11.88. Shipments also witnessed a hard fall of 21 points and the employment index hit the negative region at -2.11 from 2.44 in January. Pressure on prices has been witnessed as the prices paid index climbed for the second consecutive month by 7 points o 47.37, the highest level in a year.
As for the Import price index for the month of January it was released at 1.7% higher than the forecasted 0.5% and the previous flat reading of 0.0%.
This rise in import prices was the most since November and was driven by the 5.5% increase in imported petroleum prices. Well this definitely makes sense as energy prices sky rocketed, specifically crude. But this wasn't the only category of prices that rose. The usual other party for the couple also inclinedÃ¢â‚¬Â¦food prices! In the same report, export prices for the U.S. had also risen by 1.2%, marking the largest since January 1989.
As the news about prices came out, the reaction in Wall Street was evident as the U.S. stock futures extended losses on the weak data. The Dow Jones Industrials Average fell 93 points to 12,303 and the S&P 500 dropped 12.6 points to 1,388.5 while NASDAQ 100 declined 19.25 points to 1,775.
In a different report, the U.S. Treasury Department released its Net Long-term TIC flows for the month of December showing that it has declined to $56.5 billion compared to the predicted $76.0 billion and the previous $90.9 billion.
The decline was larger than expected where net foreign purchases amounted to $69.1 billion from which foreign official institutions bought a net of $35.9 billion and private foreign investors purchased $33.3 billion. U.S. residents also purchased $12.6 billion in securities.
Data just kept on flowing non-stop with industrial production and capacity utilization next in line. The Federal Reserve stated that the capacity utilization for the month of January came in at 81.5% higher than the expected reading of 81.3% but unchanged from the prior revised reading to 81.5% from 81.4%.
As for industrial production for January it was inline with expectations at 0.1% higher than the previous flat reading of 0.0%. On an annual basis, industrial production inclined 2.3%.
Motor vehicles and parts were able to offset a small net gain. Finally the monthly output of business equipment rose 0.4%. The largest declines were seen in the consumer durables where it had fallen to -0.7% this month from 0.5% in December and Mining dropped -1.8% from December's decline of 0.1%.
Topping it off comes confidence from Michigan where The University of Michigan released the confidence coming in at 69.6 less than the forecasted and previous readings of 77.0 and 78.4 respectively.
Confidence shook up in February and that could have a negative effect in the economy. The U.S. was doing well the past couple of days as they uncovered positive data. But today it was not able to keep this image. Dear reader, the beginning of the year is a bit unclear as data now is mixed. The manufacturing sector has been reported to be a bad sector now and the uncertainties in the economy remain visibleÃ¢â‚¬Â¦