There's no love here....

The Empire State Manufacturing Survey indicates that conditions deteriorated in November for New York State manufacturers. For the first time since mid-2009, the general business conditions index fell below zero, declining 27 points to -11.1. The new orders index plummeted 37 points to -24.4, and the shipments index also fell below zero. The indexes for both prices paid and prices received declined, with the latter falling into negative territory. The index for number of employees remained above zero but was well below its October level, and the average workweek index dropped to -13.0. Future indexes generally climbed, suggesting that conditions were expected to improve in the months ahead, although the capital spending and technology spending indexes inched lower.

We still have Hopium but in the real world we got trouble - and lots of it.

More troubling is that prices received has gone below zero, while prices paid remains over zero.  This is margin collapse, which is exactly what I have said The Fed was going to engender with its BS "QE" game. 

Input price ramps cannot be passed through to the final consumer - he doesn't have the money to pay with, and there is no wage pricing power available to the worker to force wages higher.  This is where the "inflationist" view is wrong - you can try to shove price increases through but you will fail, and the result will instead be margin and ultimately business collapse.

New orders and shipments are both down, making clear that manufacturers are responding to the inability to push those prices through the chain.  The consumer's wallet is snapping shut as it's empty, and as a consequence the chain backward from the retailer to the manufacturer is slowing.  In addition unfilled orders have collapsed to -24 as manufacturers empty their inventory pipeline in an attempt to avert disaster.  In short they've learned from the downturn - they responded almost immediately to the slowdown and held inventories to a flatline, with it coming in at zero this month.

But if you think this is over, you're wrong.  Both employment's index fell to 9.09 from 21.67, showing a huge slowdown, and in addition the workweek went negative, from 3.33 to -12.99.  This of course means that "prices received" won't be accelerating any time soon as workers incomes will be going down due to the shorter workweek.

Thank Bernanke for this - the entirety of this report's results can be traced directly to the insane ramp job in input prices that I predicted and we got as a result of the QE2-anticipation move. 

Incidentally, the general diffusion index is consistent with entry into a recession.  This indicator can "false" and needs confirmation, but it certainly isn't good - and despite the "Hopium" in the forward expectations (and there's a lot of it in this report) I will be looking to actual results for November and December instead.