The general business conditions index for August in the New York Fed's survey of manufacturing is up to 11.9 after 5.5 in July. The August reading is well above the consensus of 0.5 in the Econoday survey of forecasters. The diffusion index is up for a second month in a row and the highest since 20.2 in November 2024. The index for future conditions moderated to 16.3 in August from 25.3 in July and suggests that the current uptick in activity is expected to fade.

The index is not calculated from components which means the details may tell a somewhat different story from the headline. However, the August numbers are consistent with a pickup in activity.

The most significant change is a the new orders index which is up to 15.4 in August from 2.0 in July and the strongest since 20.7 in November 2024. While order backlogs continue to contract, the pace is slowing with minus 5.5 in August after minus 6.4 in July. The pace of shipments is a little faster at 12.2 in August from 11.5 in the prior month.

The index for delivery times is up to 17.4 in August from 8.3 in July and points to longer waits for goods in the supply chain. The inventories index slows to minus 6.4 in August from 15.6 in July and is the first negative since minus 7.5 in October 2024. The demand to stock up before tariff increases is over. The index for supply availability is a bit higher but still in contraction at minus 5.5 in August after minus 11.0 in July.

The employment index slows to 4.4 in August after 9.2 in July and the index for the average workweek is down to 0.2 from 4.2. Hiring has tapered a bit and the workweek is essentially no longer expanding.

The current prices paid index moderates slightly to 54.1 in August from 56.0 in July. However, the index for future prices paid is up to 64.2 in August from 58.7 in July and suggests that manufacturers are expecting prices to remain elevated and perhaps go a bit higher. The index for current prices received is down to 22.9 from 25.7 in the prior month and the future prices received index is down a bit to 41.3 in August from 42.2 in July. Manufacturers are seeing less room to increase prices.

The Empire index is expected to slip to 0.5 in August from 5.5 in July.

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.