The general business conditions index in the New York Fed's Empire State Survey of manufacturing jumps to a positive 10.8 after minus 24.6 in March. This is well above the consensus of minus 18.3 in an Econoday survey. The April index is the highest since 11.1 in July 2022 and ends a string of four negative readings. Although the diffusion index is not calculated from components, the rebound in perceptions of conditions likely reflects a surge in new orders. The index for future business conditions is up to 6.6 in April from 2.9 in March. This has been expansionary for the past five months, albeit mainly consistent with only modest growth.

This is only one month's data and the New York Fed's index can be volatile. However, it could raise hopes that the weakness in the factory sector in the first quarter is giving way to improved conditions.

The index for new orders reversed to a positive 25.1 in April after a minus 21.7 in March. This is the first expansion after five months of contraction and the highest since 25.1 in April 2022. Order backlogs reach neutral at 0.0 in April after minus 6.7 in March which was the 11th month of contraction for unfilled orders. With no backlog, manufacturers' turnaround is swift. The shipments index is 23.9 in April after minus 13.4 in March. After two months of slowing, the index for delivery times is neutral at 0.0 in April. The inventories index is up to 8.2 in April from minus 1.9 in March.

However, the index for employment remains in contraction for the third month in a row at minus 8.0 in April after minus 10.1 in March. The average workweek index is also in contraction and for the fifth consecutive month. The workweek index is less slow at minus 6.4 in April after minus 18.5 in March. It will take several months of solid new orders before manufacturers will renew hiring, although the workweek may increase before then.

The index for prices paid is down to 33.0 in April from 41.9 in March and is probably due to falling energy costs, although other commodities prices are easing. The prices received index is up to 23.7 in April from 22.9 in March. Manufacturers are still able to pass through some increased costs.

The Empire State index in April is expected to rebound a bit to minus 18.3 after March's much weaker-than-expected minus 24.6.

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.