US DATA
The Empire State Manufacturing Survey's General Business Conditions headline index came in well below expected at -11.9 in October (3.6 survey), the lowest since May 2024 and a sharp pullback from 11.5 in September. September marked the first above-zero reading in 10 months, so a pullback in current conditions is perhaps unsurprising - thought not to this extent. However, the details looked much stronger than the headline suggests, from both an employment and inflation perspective.
- The 6-month ahead outlook improved for the second consecutive month, to 38.7 - the best since October 2021 - from 30.6 prior.
- Looking through the subcomponents, it's a mixed story that doesn't fully capture the dichotomy between weak current conditions and the suddenly very optimistic outlook. New orders fell to -10.2, a 5-month low, from positive 9.5 prior; employment ("number of employees") however picked up to a 22-month high 4.1 from negative 5.7 prior, with workweeks increasing, despite weaker current activity. Per NY Fed, that's the first "increase in both employment and the average workweek for the first time in a year".
- Prices paid picked up 5.8 points to to 29.0, with prices received up 3.4 points to 10.8 - indicating a modest uptick in inflationary pressures albeit remaining at "modest" levels, per the report. And that came as the new supply availability index showed greater constraints, falling to -7.5 from -2.1.
Elsewhere, per the survey: "shipments edged lower. Delivery times were slightly shorter, while supply availability deteriorated somewhat. Inventories shrank".
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