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 175 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. This index is seasonally adjusted using the Philadelphia Fed's seasonal factors because its own history is not long enough with data only going back a couple of years. (Federal Reserve Bank of New York) Why Investors Care
| Released on 2/15/07 For Feb 2007 | ||||||||||||
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Highlights
Three months of soft readings in the ISM manufacturing report have raised concern over the health of the nation's manufacturing sector, but a big jump in the February manufacturing report from the New York Federal Reserve may point to improvement ahead. The Empire State index jumped sharply to 24.4 in February from a disappointing January reading of 9.1. But even the January level, well over the break-even level of zero, indicates growth in the region's manufacturing sector.
Today's report showed sharp improvement in order levels with new orders at 18.9 vs. January's 10.3 and unfilled orders at 0.00 vs. a contractionary -8.5 last month. But one reading that may confirm weakness shown in recent ISM reports is another month of contraction for inventories, at -7.5 vs. -19.2 in January. Supply managers, likely concerned over future weakness, appear to be cutting back sharply on inventories.
Price data were encouraging, underscoring this morning's drop in U.S. import prices and suggesting that the long struggle with rising raw material prices may be winding down, at least for now. Prices paid, that is input prices, still showed month-to-month pressure at 26.9 but the level is well down from 35.1 in January. Prices received, which are output prices, fell back to 12.9 vs. 19.2.
Markets can react sharply to this report, but not this morning as the data were released with the weekly jobless-claims and monthly import-price reports. But the results will without a doubt raise expectations for strong readings in today's Philadelphia Fed report.
The Empire State manufacturing index fell to 9.1 in January from 22.2 in December - indicating a slowdown in the New York manufacturing region. New orders remained slightly positive but backlogs stayed slightly in negative territory. The economy may not fall into recession if manufacturing contracts briefly, but it is preferable that manufacturing stay moderately positive as the economy decelerates to bring inflation down.
Empire State Manufacturing Survey Consensus Forecast for February 07: 10.0
Range: 5.0 to 15.0
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The Empire State Manufacturing Survey has a much shorter history than the Philadelphia Fed's business outlook survey. The two series tend to move in tandem much of the time, although not each and every month. They are both considered leading indicators for the ISM manufacturing survey. |
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