The general business conditions index in the New York Fed's Empire State manufacturing survey is up to 10.7 in October after minus 8.7 in September. The index is well above the consensus of minus 0.9 for October in the Econoday survey of forecasters. The future conditions index is up to 30.3 in October after 14.8 in September. While these reflect a more positive outlook from survey respondents, the improvement should be viewed with caution. This survey tends to fluctuate between firmer and softer readings. The two-month moving average suggests that current conditions are consistent with only narrow expansion in recent months. The average for October is 1.00 after 1.60 in September and 8.7 in August.

The main index is a diffusion index and not calculated from components. The details indexes may tell a somewhat different story than the headline. In October, the improvement seems to be mostly due to a rise in new orders.

The new orders index is up to 3.7 in October from minus 19.6 in September. The order backlogs index is up to minus 3.9 after minus 6.9 in the prior month. With the pace of new orders increasing and the drawdown in backlogs slower, the factory sector may have more work. Nonetheless, slow conditions mean that shipments moved out quickly in October. The shipments index is up to 14.4 after minus 17.3 in September.

The index for delivery times is up to 3.9 in October after 0.0 in September. This is not a significant change although it does mean that some goods are taking longer to move through the supply chain. The inventories index is up to minus 1.0 in October after minus 4.9 in September and points to less sluggishness for inventory replenishment.

The index for employment is up to 6.2 in October after minus 1.2 in September. Some factories may be hiring where they can find skilled workers as the labor market eases. However, the length of the workweek continues to contract, if less than in the prior month. The index for the average workweek is at minus 4.1 in October after minus 5.1 in September.

The index for prices paid is higher at 52.4 in October after 46.1 in September as higher tariffs push prices up. The index for prices received is up to 27.2 in October after 21.6 in September as manufacturers pass through at least some of their higher costs.

The consensus sees the index at minus 0.9 in October after modest contraction at minus 8.7 in September.

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.