New York Fed’s regional factory gauge produces first positive reading since July


The numbers: The New York Federal Reserve’s Empire State business conditions index, a gauge of manufacturing activity in the state, rose 13.6 points to 4.5 in November, the regional Fed bank said Tuesday. That’s the first positive reading since July.

Economists had expected a slight improvement to negative 6.0 from negative 9.1 in October, according to a survey by The Wall Street Journal.

Any reading above zero indicates improving conditions.

Key details: The index for new orders dropped 7 points to negative 3.3 in November.

The shipments index jumped 8.3 points to a reading of 8.

Unfilled orders slipped 3.1 points to negative 6.8 in November, a sign unfilled orders were slightly lower. Delivery times were little changed. The inventory index jumped.

Labor market conditions showed solid improvement, while the price indices were little changed.

Firms were more pessimistic about the six-month outlook, with the index for future business conditions falling 4 points to negative 6.1.

Big picture: The Empire State index is the first of several regional manufacturing gauges to be released. Economists use the data to get a gauge on the health of the manufacturing sector.

This year, the Empire index has been volatile – swinging from a high of 24.6 in April to negative 31.3 in August.

Overall, the manufacturing sector has been losing steam. The closely-watched national ISM factory index slipped to 50.2% in October from 50.9% in the prior month. That’s the lowest level since May 2020.

Market reaction: Stocks DJIA, +0.17% SPX, +0.87% were set to open higher on Tuesday. The yield of the 10-year Treasury note TMUBMUSD10Y, 3.803% fell to 3.82% as investors now see less-aggressive Federal Reserve tightening in the next six months.

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