Mixed, but encouraging, results from two important Federal Reserve manufacturing reports from the New York Fed and Philadelphia Fed out today.

While the Philly Fed report declined to a headline reading of 27.6 from 38.8, it bettered the consensus of 24.0.  The six month outlook, however, is a serious concern.

The report saw bright spots with prices received at 20.6 from 15.3, and new orders at 25.9 from 25.4.  Worrisome spots include shipping, which plunged to 28.5 from 39.1.

A special question on employment was telling. 

Q. If you expect to increase production you will:

1. Additional Hiring 25.8%
2. Increase Hours 35.5%
3. Increase Productivity 35.5%

Essentially, this means investing is taking place in computers and automation at a faster pace than hiring additional employees. (In tomorrow’s morning report, I will discuss the skills gap and new White House apprentice program.)

Empire State Manufacturing Report

At 19.8, the headline staged a dramatic improvement lifting this to the highest level since September 2014.

• 36% reported improved business conditions
• 16% reported worsening business conditions

The bottom line is manufacturing remains elevated and positioned to improve.

As for the broad market, I like that selling seems to be exhausted, although not sure what sparks a rebound other than nibbles building into momentum.

Do not panic or be anxious.  Let’s stay on the sideline for now.