US: Empire State Mfg Survey

Fri Jun 15 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous
General Business Conditions Index - Level 19.1 17.0 to 22.5 25.0 20.1

Enormous strength is Empire State's indication for the June factory sector, at a headline index of 25.0 that easily tops Econoday's consensus range. Both new orders, up more than 5 points to 21.3, and backlog orders, up more than 4 points to 9.3, are pointing to rising activity in the months ahead.

And activity is already at a very strong pitch with shipments up more than 4 points to 23.5, employment up more than 10 points to 19.0, and the average workweek up nearly a point to 12. Delivery delays are routine and selling prices are going up, both indications of very strong demand.

The factory sector, where orders are rising at a roughly double-digit pace, is the economy's hottest sector. Yet coming up later this morning is industrial production where the manufacturing numbers have been less positive.

Market Consensus Before Announcement
June's Empire State index is expected, at a consensus 19.1, to roughly match May's strength at 20.1. New orders have been solid and backlogs have been on the rise which point to general strength for the June report.

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 200 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.