Empire Manufacturing Rebounds

Today's NY Fed Manufacturing report for May came in stronger than expected (17.1 vs 9.5) and helped to reverse part of the decline we saw in April when the index came in at 6.6.  Even after this month's improvement, however, the index still remains below the highs we saw earlier this year.

Although the overall index for current conditions rose this month, the outlook over the next six months declined for the fourth straight month.  Likewise, plans for Capital Expenditures and Technology Spending also decreased during the month. 

The charts below show the changes in each of the subcomponents of the NY Fed Manufacturing report.  For each component we show the current conditions (blue line) as well as the outlook over the next six months.  In most cases the outlook for the next six months is above the level for current conditions, which makes sense given the fact that it is always natural to expect business to get better in the future.

With that in mind, it is often interesting to see where manufacturers are expecting conditions to get worse than they currently are.  The components that fit this criteria are Inventories, Number of Employees, and Average Workweek.  Finally, while the outlook for shipments six months from now is still above the current outlook, this month we saw a sharp drop in the outlook for shipments even as the current conditions for shipments rose to its highest level in a year.

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