The Federal Reserve Bank of New York has released its Empire Manufacturing Survey for October, which is one of the first “live month” economic readings that economists and investors get to see each month. It is also only a snapshot of the New York region rather than a national reading. The survey’s index of general business conditions unexpectedly rose to 30.2 in October from 24.4 in September.
While this was an unexpected gain, it was also handily above expectations. Bloomberg had its consensus estimate down at 20.0 to reflect some weakness seen in other economic indicators, and its EconoDay range of estimates was 19.0 to 24.1. Reuters had a consensus estimate at 20.7.
The Federal Reserve Bank of New York referred to October’s business activity as growing at a robust pace. In fact, the Fed also represented in its release that this was its highest level in three years. Indexes assessing the six-month outlook suggested that firms remained optimistic about future conditions as the index for future business conditions rose by six points to 44.8 and the index for future new orders also came in at 44.8.
Some 44% of respondents reported that conditions had improved over the prior month. There were also 14% that reported that conditions had worsened.
The new orders index came in at 18.0 (down seven points) and the shipments index rose 11 points to 27.5. These readings point toward ongoing solid gains in orders and shipments, and the unfilled orders index moved down seven points to 2.3. Delivery times were noted to be slightly longer (down 12 points to 3.1) at the same time that regional inventory levels decreased (down 14 points to −7.8).
October’s labor market indicators were shown to reflect a strong increase in employment but also little change in hours worked. The index for number of employees rose five points to 15.6 and the workweek index was zero.
On the inflationary front, the Fed showed that both input prices and selling prices rose at a somewhat slower pace from September. The prices paid index fell by nine points to 27.3, while the prices received index fell seven points to 7.0.
It is always important to consider how an index is created and how large the pool is for a regional report. After all, these reports can move markets. The New York Fed sends a questionnaire covering a variety of indicators compared with the previous month and each is given an outlook for six months. This monthly survey is sent on the first day of each month to the same pool of roughly 200 manufacturing executives (CEO/president level) in New York State. Most responses are completed by the 10th day of each month, although the New York Fed accepts surveys until the 15th day of each month.