October Factory Conditions October Outlook Negative

The first indication on October's factory conditions is negative. The Empire State index is below zero for a third month in a row, at minus 6.80 vs similar readings in September and August. And the details are almost entirely negative with new orders at minus 5.60 for a second sub-zero score in a row. Shipments are at minus 0.60 with employment in reverse for a fourth straight month, at minus 4.70. Unfilled orders and inventories are almost always in contraction in the Empire State sample and they are again in the October report, in low double digits which is even weaker than usual.

But there are positive signs including life for prices. Input costs rose nearly 6 points to 22.60 which signals the greatest month-to-month pressure in more than 2 years, since September 2014. Pressure also appears in selling prices, which rose nearly 3 points to 4.70 for their best showing since July 2015. The 6-month outlook is also a positive, at a respectable 36.00 though down about 2 points from last month.

Positives aside, the trends in this report are pointing to continued sputtering for manufacturing, a sector that has been flat all year on weak demand for machinery and generally weak demand from overseas.

Recent History Of This Indicator:
The Empire State index, like the factory sector as a whole, has been flat all year reflecting lack of business investment in new equipment and general weakness in global demand. The index came in at minus 1.99 in September with new orders even weaker at minus 7.45. Forecasters see the October index, which will be the first indication on this month's factory conditions, little changed at a very modest plus 1.00.