Highlights
The Empire State report showed some improvement in current readings for January but -- more importantly -- showed a deep breakdown in the 6-month outlook, a breakdown that underscores a deep pessimism among the region's manufacturers. First a look at the current readings led by a 5 point gain in the general business conditions index to -22.2 vs. December's -27.9 (-25.8 initially reported). But order readings barely show any improvement, at -22.8 for new orders and -26.1 for unfilled orders. Remember, negative readings indicate month-to-month contraction with improvement here merely indicating month-to-month contraction at a slightly less severe rate. Shipments actually contracted more deeply in the month, at -13.1 vs. -11.3 for an early indication that first-quarter manufacturing output may actually contract more deeply than the fourth quarter. Inventories are contracting at a greater speed, at -19.3 vs. -17.0, but not fast enough given the decline in output. High inventories will mean further job cuts evident in this report with the number of employees index falling 2-1/2 points to -26.1. Price readings were mixed but still show deflation, at -18.2 for prices paid, a nearly 10 point fall from December, a reading offset by a -3.4 level for prices received which is up more than 8 points.

The real bad news in the report is the 6-month outlook where readings suddenly and dramatically lurched into the negative column, at -4.0 for the overall index vs. 18.1 in December. Orders across the components show similar results with the exception of prices paid and prices received which were little changed roughly near zero, perhaps a silver lining that suggests manufacturers expect some stability to appear. The Philadelphia Fed's report on its manufacturing sector follows at 10:00 ET.

Market Consensus Before Announcement
The Empire State manufacturing index remained deep in contraction mode in December although this index was little changed at minus 25.8. Weak demand for output has led to a plunge in price readings. The prices paid index fell nearly 30 points to minus 7.5 while prices received declined more than 20 points to minus 11.7. The orders picture was not favorable for production in the near term as the new orders index came in at minus 20.8 and backlogs were at negative 27.7.

Empire State Manufacturing Survey Consensus Forecast for January 08: -25.0
Range: -28.0 to -20.0

2009 Release Schedule

Released On: 1/15 2/17 3/16 4/15 5/15 6/15 7/15 8/17 9/15 10/15 11/16 12/15 Released For: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec