US: Empire State Mfg Survey

Thu Feb 15 07:30:00 CST 2018

Consensus Consensus Range Actual Previous
General Business Conditions Index - Level 17.5 13.0 to 19.0 13.1 17.7

Much like the Philly Fed, the sample for the Empire State report continues to report strong conditions, at 13.1 for February. New orders are at 13.5 with unfilled orders building. Shipments are strong as is hiring and the average workweek is rising. And just like the Philly Fed, price indications are heating up noticeably with input costs accelerating sharply and selling prices showing steady and very strong traction.

Regional reports have been so strong that capacity stress, such as slowing delivery times and lack of available labor, continue to come into question. But these reports have consistently overshot actual government data, such as the manufacturing component of the industrial production which is coming up later this morning at 9:15 a.m. ET and where only modest strength is the call.

Market Consensus Before Announcement
The Empire State index pulled back in January to what was still a very strong rate of growth. Though growth for most of January's readings slowed including shipments and employment, price data showed acceleration including expectations for future costs and future selling prices. After 17.7 in January, the consensus for February is 17.5.

The New York Fed conducts this monthly survey of manufacturers in New York State. Participants from across the state represent a variety of industries. On the first of each month, the same pool of roughly 175 manufacturing executives (usually the CEO or the president) is sent a questionnaire to report the change in an assortment of indicators from the previous month. Respondents also give their views about the likely direction of these same indicators six months ahead.

Investors track economic data like the Empire State Manufacturing Survey to understand the economic backdrop for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a moderate growth environment that won't generate inflationary pressures. The Empire Manufacturing Survey gives a detailed look at New York state's manufacturing sector, how busy it is and where things are headed. Since manufacturing is a major sector of the economy, this report has a big influence on the markets. Some of the Empire State Survey sub-indexes also provide insight on commodity prices and other clues on inflation. The Federal Reserve closely watches this report because when inflation signals are flashing, policymakers can reset the direction of interest rates. As a consequence, the bond market can be highly sensitive to this report. The equity market is also sensitive to this report because it is the first clue on the nation's manufacturing sector, reported in advance of the Philadelphia Fed's business outlook survey.