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 4/15/08 For Apr 2008 | ||||||||||||
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Highlights
Conditions are leveling in the New York state manufacturing area according to the New York Fed's Empire State report that shows a major improvement in the general business conditions index, at 0.6 in April vs. severe contraction in prior months including a -22.2 reading in March. Shipments soared to 17.5 vs. -5.2 in March with new orders stabilizing, at zero vs. -4.7. Remember these readings track month-to-month change, with zero meaning no change from the prior month and a solidly positive reading like 17.5 indicating that many more respondents reported month-to-month improvement than decline.
But stabilization is the theme, not growth. Unfilled orders declined to -6.3 vs. 1.1 indicating that the improvement in shipments was not related to new orders. Manufacturers in the region are understandably drawing down inventories, at -4.2, with employment readings, for the number of employees and the workweek, both coming in at zero.
The real bad news in the report is prices which are showing accelerating pressure, no surprise given the burst of price hike announcements from steel makers and chemical producers. Input prices jumped another 7 points to 57.3 with greater pressure appearing for final goods, perhaps the worst news in the report with the prices received index jumping 5 points to 20.8.
The stress on prices is underscored by the March PPI which shows a 1.1 percent headline jump in data released along side this report. But this report is still a big positive, suggesting that prior declines may have overstated weakness and pointing to improvement in other manufacturing reports including the closely watched data from the Philadelphia Fed that will be released on Thursday.
The Empire State manufacturing index continues to be in recession territory - and worsened further in the latest month. The Empire State index fell to minus 22.2 in March from minus 11.7 in February, showing contraction in new orders, shipments and inventories. Pressures on input costs, however, were severe with prices paid up more than 3 points to 50.6. But only some of this pressure is feeding through to final prices as prices received came in at 15.7, down about 2 points in what could be considered a mild positive. The price numbers mean that either producers will find a way to pass along higher costs or will suffer slower profits.
Empire State Manufacturing Survey Consensus Forecast for April 08: -16.0
Range: -22.2 to -12.0
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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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