According to the New York Fed, the Empire State business conditions index, which measures manufacturing activity in the state, experienced a significant increase in November. The index rose by 13.7 points to reach 9.1, marking its highest level since April.
Economists surveyed by the Wall Street Journal had expected a negative 3 reading, indicating that the actual result surpassed expectations.
Any reading above zero indicates improving conditions.
Key Details
While the headline numbers look positive, the details beneath tell a slightly different story for the month of November.
The closely watched index for new orders saw a slight decline of 0.7 points, bringing it to a negative 4.9. Unfilled orders also experienced a significant drop of 4.1 points, falling to a negative 23.2.
Expectations for the next six months slumped by 24 points, reaching a negative 0.9.
On a positive note, the shipments index rose by 8.6 points in November, reaching a value of 10.
The Big Picture
Manufacturing data has consistently shown weakness, and monthly readings have been quite volatile. The November upswing in the Empire State index is likely to reignite discussions about stability within the factory sector moving forward. The previous month’s weak ISM factory index data had dampened expectations of a bottom in the sector. In October, the ISM factory index dropped to 46.7% from the prior month’s value of 49%, marking the 12th consecutive month of contraction.
Market Reaction
Stocks, including DJIA and SPX, were expected to open higher on Wednesday. Meanwhile, the 10-year Treasury yield (BX:TMUBMUSD10Y) rose to 4.47% during early morning trading.
