Firms responding to the September Business Outlook Survey reported nearly flat business activity this month. The survey’s indicators for general activity and new orders both improved from last month but recorded levels near zero. Firms reported continuing declines in shipments, employment, and hours worked. Indicators for the firms’ expectations over the next six months, however, improved notably this month, although the same firms forecast continued deceleration in production growth in the fourth quarter.
You gotta love the spin, but what do the actual internals tell us?
First, expectations never declined materially -- there was a lot of oscillation, but nobody got terribly bearish -- nor did they during the collapse! Amusing, isn't it?
On the current conditions side new orders were up slightly from declining, but shipments collapsed, down to -21.2 .vs. -11.3. Unfilled orders decreased at a slower rate, delivery times decreased at a slower rate, and inventories dropped precipitously. Prices paid grew at a slower rate but prices received actually decreased from increasing, which implies demand destruction and inability for force through cost increases (read: margin compression.)
Finally, employees and workweek both decrased, although at a slower rate than last month.
So why was the diffusion index only down -1.9? Prices paid, basically, along with new orders being slightly positive.
This is an unqualified weak report, although the hopium is extreme on a forward basis, now up to 41.2 from 12.5 for general conditions. New orders and shipments are both at ridiculously bullish levels.
If these folks are planning to spend basis on this they better be right or they will be bankrupt a year from now.