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Analysis

Empire State survey of manufacturing

by Gabriel Stein

Mon 18 Aug 2014

Empire State survey of manufacturing Enlarge Chart loading Image

What the chart shows: The chart shows the three-month moving average of the ‘general business conditions’ and expected new orders diffusion indices.

Why the chart is important: The New York Fed’s survey of manufacturing in New York State – the so-called Empire State survey – is one of the key indicators of US manufacturing activity. Although the index fell in August, the monthly numbers can be volatile and the reading for July was the highest in four years. On a three-month moving average, the index continues to rend up, if erratically. Moreover, new orders expectations rose from 25.57 in July to 50.44 in August, the highest since late 2009.

The data confirm that the US economy remains in recovery mode; while the volatility of the monthly data also highlight that this recovery remains muted compared with previous recoveries. This is one reason why the Fed is likely to move slowly to tighten monetary policy; but also why it may turn out to move too slowly.

Chart and comments provided by Oxford Economics www.oxfordeconomics.com