Econoday Report: Empire State Mfg Survey September 15, 2009

2009 Economic Calendar

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Empire State Mfg Survey

Released on 9/15/2009 8:30:00 AM For September, 2009

	Prior	Consensus	Consensus Range	Actual
General Business Conditions Index - Level	12.08	14.0	8.0 to 18.0	18.88

Highlights
Indications are building that the manufacturing sector, having stabilized at a new base line, is now turning higher. Led by new orders, the Empire State index rose nearly 7 points in September to 18.88. New orders nearly rose 6-1/2 points to 19.84 pointing to increasing activity in the months ahead. Delivery times slowed in the month, at 1.19 vs. a long run of negative readings. The gain in delivery time indicates congestion in the supply chain -- confirmation of greater economic activity. But shipments did moderate in the month, to 5.34 vs. August's 14.11 though the strength in new orders does point to higher shipments ahead. Inventories continue to surprise, at a deeply negative minus 25.00 to indicate that manufacturers continue to destock, suggesting they are keeping down costs as much as possible despite what is an improving outlook. Six-month outlook readings are very strong with the general business conditions index up more than 4 points to 52.29.

Turning back to current readings, cost consciousness is evident not only in inventories but also in employment where the index remains in moderately negative ground at minus 8.33. To meet production needs, respondents increased the workweek with the related index rising roughly 12 points to 5.95 in what is typically the first step toward eventual hiring. The report's price readings confirm building evidence across economic reports that prices for raw materials are rising but those for finished goods are not. Prices paid rose 6-1/2 points to 20.24 while prices received remains in negative ground at minus 3.57. Watch for Thursday's report from the Philadelphia Fed for the next update on manufacturing.

Market Consensus Before Announcement
The Empire State manufacturing index returned to positive growth territory in August, jumping to 12.08 from July's minus 0.55 for its best reading since the start of the U.S. recession. Odds are the index will stay positive in September as August's new orders index showed a second month of actual month-to-month growth at 13.43-up sharply from July's 5.89.

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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