Empire State Manufacturing Survey Musters Mixed Recovery

After a dramatic breakdown in June, the Empire State index mustered a mixed recovery in July to plus 4.3 from minus 8.6. Yet new orders are still in contraction but less severely at minus 1.5 versus June's very deep minus 12.0, as are unfilled at minus 5.1 vs minus 15.8. Nevertheless, two straight months of negative scores for new and unfilled orders point to a stumble ahead for shipments which, at plus 7.2, continue to keep moving out the door at least for now (note this report doesn't have a production index).

As for employment, Empire State's sample is already reducing staffing levels to minus 9.6 from June's already contractionary minus 3.5. Inventories are also contracting and sharply, in the negative column for a second straight month at minus 10.9. Despite the turbulence, price readings have remained mostly stable with inputs showing steady pressure and with improvement for selling prices easing only slightly.

One positive in the report is a quick bounce back for the 6-month outlook which fully reversed June's dip to a respectable 30.8. Yet despite the spots of improvement, this report, especially orders and employment, will not do much to ease concerns at the Federal Reserve, expressed last week by Jerome Powell, that the nation's factory sector, facing slowing exports and slowing global growth, is at the risk of breaking lower.