The general business conditions index in the New York Fed's Empire State survey of manufacturing is 9.1 in November, a solid gain from minus 4.6 in October. The reading is above the consensus of minus 3.0 in the Econoday survey of forecasters. The detail indexes in the survey are somewhat at odds with this. The improved outlook seems to be mostly due to moderation in prices paid and a continued ability to pass through at least some higher costs.

The index for future business conditions roughly six months from now falls to minus 0.9 in November from 23.1 in October and is the first negative since minus 6.1 in October 2022. The steep decline could be due to concerns about higher financing costs for businesses and consumers if the Fed maintains restrictive monetary policy longer than previously expected. For the near term, it appears that recent improved readings for inflation are not the entire story behind anticipation of higher prices paid and a need to pass through costs.

The index for new orders is little changed at minus 4.9 in November after minus 4.2 in October. The index for order backlogs shows steeper contraction at minus 23.2 after minus 19.1 in the prior month. The index for order shipments speeds up to 10.0 in November after 1.4 in October. The index for delivery times maintains its modest pace of slowing at minus 6.1 in November after minus 6.4 in the previous month.

The index for employment tips down to minus 4.5 in November after briefly moving into positive territory at 3.1 in October. The average workweek index falls to minus 3.8 in November from 2.2 in October.

The index for prices paid in November is 22.2 after 25.5 in October and likely reflects the easing in energy costs. The index for prices received is about the same at 11.1 in November after 11.7 in October.

November's Empire State index is expected to improve slightly to minus 3.0 after October's minus 4.6. Both new orders and unfilled orders in this report have been in contraction.

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.