Hints Of Tariff Trouble In Manufacturing Report

There are hints of tariff trouble in this month's Empire State report where slowing is the result, at 15.8 for the headline index vs 22.5 in March and Econoday's consensus for 18.2. But it's the 6-month outlook readings that tell the tale showing very severe and sudden declines, collapsing a whopping 25.8 points for general conditions to only 18.3 which is very weak for this reading. The outlook shows similar declines for new orders and shipments in what are very likely direct reactions to steel and aluminum tariffs put in place in March not to mention the wider threat underway of rising tariffs in general.

More immediately, demand in April is slowing which is probably a positive given the unusually strong and unsustainable rates of growth in prior months. Growth this month in both new orders, at 9.0, and backlog orders at only 3.7 are slowing, as is employment which is at 6.0.

But production in the sample is definitely still humming along, at 17.5 for shipments while the workweek which is up 11 points to 16.9. And there are still plenty of indications of capacity stress including delivery times where delays are heavy and also prices which aren't accelerating further this month though they remain very elevated, at 47.4 for input costs and 20.7 for selling prices.

Big double digits nearly everywhere are the usual results of this report which makes April -- and especially the decline in the outlook -- a signpost month for this report. Watch perhaps for similar results in Thursday's Philly Fed report.