Manufacturing activity in the New York region heated up right with the temperature in August as the Empire Manufacturing survey unexpectedly rose to 25.6 versus estimates for a reading of 20. As shown below, the tracker for General Business conditions hit its highest level since last October. Expectations, however, remain a bit more subdued. While the index for Business Conditions six months from now increased on a m/m basis, it remains well off of its recent highs.
The table below breaks out this month’s report by each of its subcomponents for both current conditions and expectations. Here again, we can see that manufacturers are a lot more optimistic about the present than the future. Of the nine components in the Current Conditions category, just three declined, and none of the drops were exceptionally large. On the upside, Shipments and Unfilled Orders both saw large increases, while Prices Paid saw just a modest increase (Prices Received actually declined).
Looking out over the next six months, most components actually saw declines as Shipments, Prices Paid, Cap Ex, and Tech Spending were the only categories that increased relative to July’s readings.
Obviously, inflation readings have become increasingly scrutinized by the market lately, so it’s encouraging to those fearful of inflation accelerating that the recent moves in both Prices Paid and Prices Received haven’t been as one-directional to the upside. In the case of both Prices Paid and Prices Received, the indices for both Current Conditions and Expectations have stalled out in the last few months. While it could be nothing more than a breather, recent declines in commodity prices should help to keep some level of gravity on prices.