Earlier today, we got one of our first reads on the manufacturing sector for the month of July with the Empire Manufacturing report from the New York Fed. For a change, the report came in better than expected. While economists were expecting the headline reading to come in at 3.0 from last month’s level of -1.98, the actual reading was slightly better at 3.9. Although the report was only marginally better than expected, stronger than expected reports in this indicator have been hard to come by in recent months. Prior to today, the report had only been better than expected once in the last nine reports!
The charts below show the headline General Business Conditions Index for the Empire Manufacturing report for both current conditions and conditions six months from now (top chart). Below that we have also included a chart showing plans for Capital Expenditures and Technology Spending over the next six months. In terms of General Business conditions, the July reading is the highest since March but remains well below its highs from last year. Plans for Cap Ex and Technology spending, however, saw major bouncebacks this month after declines of similar magnitudes in June.
The table below breaks out the Empire Manufacturing report for July with each of the report’s individual sub-indices. Although General Business Conditions improved, the majority of the sub-indices declined in July with the largest drops coming in Inventories (-10.4) and Number of Employees (-5.5). Looking at manufacturer expectations over the next six months, sentiment is certainly more optimistic as seven out of nine components improved. The only two that declined were Number of Employees (-3.9%) and Average Workweek (-3.2%), which doesn’t bode particularly well for the employment picture.