The general business conditions index in the New York Fed Empire State Survey of Manufacturing swings 20.9 points higher to 1.9 in September after minus 19.0 in August. The September reading is well above the consensus of minus 10.0 in the Econoday survey of forecasters. Current business sentiment in the New York Fed district appears to have improved mainly on rising new orders. The future business conditions index is up to 26.3 in September after 19.9 in August. It is up for the second month in a row to its highest since 36.6 in March 2022. While the index for current business conditions can be volatile, the report points to underlying improvement or at least more stable conditions for the regional factory sector and a more positive outlook for the near future.

The new orders index is up to 5.1 in September, more than reversing the plunge to minus 19.9 in August from 3.3 in in July. The index has been positive in three of the last four months and suggests that new orders are expanding more consistently, if with occasional setbacks. The index for shipments turns around to 12.4 in September from minus 12.3 in August. The employment index remains soft at minus 2.7 after minus 1.4 in the prior month, and the index for the average workweek also continues to contract at minus 5.0 after minus 10.7.

Delivery times are little changed, if a bit faster. The delivery times index is up to 2.1 in September after 1.9 in August. The inventory index shows that contraction extends to the fifth straight month at minus 6.2 in September after minus 9.7 in August.

The index for prices paid is virtually the same at 25.8 in September from 25.2 in August. However, the index for prices received is faster at 19.6 from 12.6 in the prior month. Businesses are seeing slightly higher input costs in recent months, but are able to pass through some of this.

September's Empire State index is expected to rise to -10.0 after August's minus 19.0 which was much lower than expected.

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.