Richmond Fed: -17 "very deep contraction"

Report results blamed on Cooler weather... and unusually Hot weather!

ICSC-Goldman Store Sales
7:45 AM ET
Highlights
Cooler weather in the July 21 week helped drive sales of fall apparel and of back-to-school goods, lifting ICSC-Goldman's same-store sales index by a solid 1.0 percent. The year-on-year rate of plus 3.3 percent is the best in five weeks. Still, the report describes sales as generally choppy and uneven across retail categories. Redbook will post its results later this morning at 8:55 a.m. ET.

Redbook
8:55 AM ET
Two different reports and two different stories. Unlike ICSC-Goldman, Redbook reports significant slowing in the July 21 week which it ascribes to unusually hot weather. ICSC-Goldman, released earlier this morning, describes weather in the July 21 week as cool and favorable for fall goods. Redbook's year-on-year same-store sales index shows a very weak plus 1.3 percent rate. Redbook warns that consumers are in the doldrums and it sees contraction this month which is not a good signal for the government's monthly retail sales report.

PMI Manufacturing Index Flash
8:58 AM ET
Activity in the US manufacturing sector isn't contracting but it is showing its slowest rate of growth of the recovery, according to Markit Economics' flash report for July where the composite index slowed to 51.8 vs June's revised (down) 52.5. New orders are still above 50 though they are down nearly 2 points to 51.9. Weakness in new export orders, at 48.2 and below 50 for a second straight month, is a key factor and no doubt reflects weakness in Europe and possibly Asia as well. Total backlog is also in contraction for a second straight month, at 48.7 vs 49.6 in June.


Richmond Fed Manufacturing Index
10:00 AM ET

Highlights
The Philly Fed a couple months ago was the first regional report that showed significant contraction in monthly conditions followed later by the New York Fed and now, dramatically, by the Richmond Fed whose manufacturing index fell to minus 17 to show very deep contraction vs only fractional contraction in June. New orders, the life blood of business, fell to minus 25 vs June's already very weak minus 7. Backlogs, at minus 27, are extending their run of deep contraction.

Shipments show roughly the same degree of contraction as new orders while inventories are on the rise, a build that is likely unwanted given the weakness in orders. One positive, one that may not last however, is relative strength in employment though the Richmond Fed's sample is adding fewer employees than in previous months.

The Richmond Fed report doesn't get much play in the markets but it may today given how extreme these declines are. This report isn't helping the Dow any which is moving to opening lows following today's release.

Edited by Rogerdodger, 24 July 2012 - 10:36 AM.