Econoday Report: Empire State Mfg Survey October 15, 2009

2009 Economic Calendar

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Empire State Mfg Survey

Released on 10/15/2009 8:30:00 AM For October, 2009

	Prior	Consensus	Consensus Range	Actual
General Business Conditions Index - Level	18.88	17.5	11.0 to 20.0	34.57

Highlights
The month-to-month rate of increase is picking up steam quickly in the New York manufacturing region. The Empire State general business conditions index jumped to 34.57 in today's October report vs. 18.88 in September. The index first popped over the break-even level of zero in August and has since indicated, again, rising rates of month-to-month expansion.

New orders have been mirroring the overall index, now at 30.82 and pointing to extended gains for overall activity in the months ahead. Unfilled orders have finally popped over zero, now at 2.60 and reflecting the increasing level of activity that is backing up work. Shipments really jumped in the month to 35.08 vs. September's 5.34, helping to drive up employment to 10.39 in a reading that ends a long string of declines. The workweek also rose sharply, to 20.78 vs. 5.95.

An odd thing in the report is that manufacturers in the region continue to work down inventories aggressively, at -18.18 vs. -25.00 in a month-to-month comparison that only hints at a slowing rate of drawdown. The ISM manufacturing report, that samples firms from around the country, showed in its September data a pivotal slowing in destocking that is not confirmed here. And firms in the New York region expect to continue to draw inventories well into next year with the 6-month outlook for the component at -5.19, but still much less severe than the prior reading of -17.86.

Price readings are steady showing increasing month-to-month costs for inputs, at 19.48, but no pricing power for outputs (or finished goods), at -5.19. Today's data are definitely a positive, suggesting that the manufacturing sector, which was among the first sectors to contract, is poised to help lead the whole economy into recovery. Next up at 10:00 ET is the Philadelphia Fed's regional manufacturing report.

Market Consensus Before Announcement
The Empire State manufacturing index rose nearly 7 points in September to 18.88. This was the highest since November 2007 when the index hit 25.02. Prospects look good for October as the September new orders index advanced nearly 6-1/2 points to 19.84

Definition
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. Why Investors Care

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.

Data Source: Haver Analytics

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