Economic data say…. maybe the stock market decline is warranted

Stock market volatility (which is most notable when it’s downward, as has been present in recent weeks) is sometimes transient noise. At times, however, it can herald/anticipate changes in the trajectory of the economy (in either direction).

Several economic data points were released today.

I’ve written about capacity utilization before here, here, here and here.

Capacity Utilization 5 year history:

capacity utilization 5 year history

Capacity Utilization 10 year history:

capacity utilization 10 year history

I’ve written about inventory build-ups before here and here.

Business inventories to sales ratios 5 year history:

business inventories to sales ratio 5 year

Business inventories to sales ratios since 2003:

business inventories to sales since 2003Source: Bloomberg

 

The Empire Fed Manufacturing survey is another regional indicator of economic activity, similar to the Chicago Purchasing Managers Index, which I recently wrote about here.

empire fed manufacturing surveySource:Bloomberg

 

I consider each of these data points worth watching. The information released today for all of them is meaningful in magnitude, trend, and direction… all negative. I take notice.

 

Sources: Industrial production and capacity utilization (The Federal Reserve); Empire State Manufacturing Survey (Federal Reserve Bank of New York); Empire State Manufacturing Survey-Full Report (The Federal Reserve Bank of New York); All graphs from Bloomberg

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