The numbers: Business activity in New York State increased in July for the first time since the pandemic began in March, according to the New York Fed Empire State Manufacturing Survey released on Wednesday. The Empire State Trading Conditions Index rose to 17.2 in July from 0.2 negative in the prior month. A reading above zero indicates better conditions. Economists were expecting a reading of 8.9, according to a survey by Econoday.
What happened: Forty-one percent of manufacturers reported that conditions were better in early July than in June, up from 36% in the previous survey.
The new orders index increased 14.5 points to 13.9, indicating that orders increased. Shipments rose 15.2 points to 18.5.
The employee index increased 3.9 points to 0.4 in July, indicating that employment levels were stable.
After jumping to a multi-year high in June, optimism about future conditions cooled somewhat this month, with the Future Conditions Index falling 18.1 points to 38.4.
Big picture: The Empire State Index has steadily improved since hitting a record low of 78.2 in April. More factories are opening, even with new health guidelines. The index does not measure activity levels, only exchange rates. It is closely watched because it is the first of several regional manufacturing meters to be launched. While they can often be volatile from month to month, overall, regional indices present one of the most timely readings on a crucial cyclical sector. The ISM National Factory Index increased to 52.6% in June from an 11-year low of 41.5% in April.
What are they saying? “The recovery continues, but there are unlikely to be any more significant short-term gains,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market reaction: US stocks opened sharply higher on Wednesday. The Dow Jones Industrial Average DJIA,
recovered in the morning trade.
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