In a surprising development, the Empire State business conditions index, a key measure of New York's manufacturing activity, rebounded by 21 points to 1.9 in September, as reported by the regional Federal Reserve Bank on Friday. This recovery follows a significant 20.1 point drop in August and contradicts economists' forecasts of a negative 10 reading, according to a Wall Street Journal survey.
The Empire State index has experienced considerable volatility this year, with two instances of it falling below negative 30 before recovering. Despite these fluctuations, economists use this regional data to gain preliminary insights into the overall condition of the country's factory sector.
The index for new orders witnessed a substantial jump of 25 points to 5.1 in September. The shipments index also saw a sharp increase of 24.7 points to reach 12.4. However, unfilled orders only slightly rose by 1.6 points to negative 5.2, indicating an ongoing decline. Inventories also decreased again in September.
Labor market indicators suggested a slight decrease in employment levels and the average workweek duration. On the other hand, future business conditions expectations for the next six months climbed by 6.4 points to reach 26.3 – the highest level observed in over a year.
The ISM manufacturing index, another critical measure of the nation's factory sector, has demonstrated contraction for ten consecutive months through August.
The financial markets responded positively to these developments on Friday. The DJIA SPX stocks were set for an opening surge while the yield on the 10-year Treasury note increased to 4.32%.
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