Empire State Manufacturing Survey: Activity Jumped in August, Highest in 3 Years

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 25.2 was a jump of 15.4 from the previous month's 9.8 and its highest in three years.

The Investing.com forecast was for a reading of 10.0.

The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.

Here is the opening paragraph from the report.

Business activity grew strongly in New York State, according to firms responding to the August 2017 Empire State Manufacturing Survey. The headline general business conditions index climbed fifteen points to 25.2, its highest level in nearly three years. The new orders index rose seven points to 20.6 and the shipments index edged up to 12.4, pointing to solid gains in orders and shipments. Delivery times continued to lengthen, and inventory levels moved lower. Labor market indicators pointed to an increase in employment and hours worked. Input prices rose at a faster clip than last month, while selling prices rose at a somewhat slower pace. Indexes assessing the six-month outlook suggested that firms were very optimistic about future conditions. [source]

Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Empire State Manufacturing

Click this link to access a PDF set of charts of the individual components over the past 12 months.

Since this survey only goes back to July of 2001, we only have one complete business cycle with which to evaluate its usefulness as an indicator for the broader economy. Following the Great Recession, the index has slipped into contraction multiple times, as the general trend slowed. 2015 saw a gradual decline that picked up in 2016.

Here is an overlay of the current and future conditions (a six-month outlook). The future conditions index is still optimistic almost six months into the new administration.

Meanwhile, here's another look at the latest ISM Manufacturing Business Activity Index.

ISM Manufacturing PMI