The general business conditions index in the New York Fed's Empire State survey of manufacturing is up sharply this month to 11.5 after minus 4.7 in August. The September reading is substantially higher than the consensus of minus 3.9 in the Econoday survey of forecasters and is the first positive reading since 9.1 in November 2023. The future business conditions index is up to 30.6 after 22.9 in August and is the highest since 36.6 in March 2022.

The general business conditions index can see significant month-to-month fluctuations, so the one-month jump of 16.2 points should be interpreted with caution. Nonetheless, in the context of the performance of the detail index, it does suggest that the regional factory sector is coming out of its long contraction.

The index for new orders is up 17.3 points in September to 9.4, its first positive reading since 5.1 in September 2023. The index for unfilled orders is up 9.5 points to 2.1 in September after flat or contractionary readings since June 2022 with the exception of a scant expansion at 1.0 in June 2024. The shipments index points to new orders moving out quickly at 17.9 in September after 0.3 in August. The delivery time index is at minus 1.1 in September after minus 3.2 in August and is consistent with a supply chain that is running neither too slow nor too fast. The inventories index is at 0.0 (zero) and indicative of stocks on hand that are neither increasing or decreasing.

The index for employment does remain in contraction at minus 5.7 in September but is firming with modest improvements since June. The index for the average workweek is up to 2.9 in September after minus 17.8 in August and is the first positive since 2.2 in October 2023. While manufacturers may not be hiring, they are offering more hours to those already on payrolls.

The index for prices paid is essentially unchanged at 23.2 in September after 23.4 in August and hints at relatively stable input prices. The index for prices received is down to 7.4 in September after 8.5 in August. Manufacturers are seeing less upward pressure in costs and maintaining some ability to pass through those costs.

The Empire State index, at a minus 3.9 consensus, is expected to extend its long contraction in September following August's minus 4.7 which compared with expectations for minus 6.0. New orders in August fell more than 7 points to minus 7.9 while unfilled orders were at minus 7.4.

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.