Maybe the Delta variant drag on the US economy will prove fleeting. For the manufacturing sector, anyway.
To the extent you can draw any tentative conclusions from the September vintage of the New York Fed’s Empire survey, that’s probably as decent a read as any other.
At 34.3, the headline print was well ahead of estimates (figure below). Consensus was looking for 17.9.
The beat came as something of a relief. The decline in August was the largest since the original pandemic lockdowns.
New orders, shipments and unfilled orders all rose fairly sharply, while the survey noted that labor market indicators pointed to strong growth in employment and the average workweek. Not surprisingly given the operating environment, the delivery times gauge hit a record high.
Price pressures were evident. Although both the prices paid and received gauges were generally in line with last month’s prints, the small rise in the latter (two points to 47.8), represented a third straight all-time high (figure below).
“Looking ahead, firms remained very optimistic that conditions would improve over the next six months, and capital spending and technology spending plans increased markedly,” the color accompanying the release went on to say.
Meanwhile, import prices fell for the first time in nearly a year, dropping 0.3% MoM (figure below). That was a notable miss and the biggest decline since April of 2020. Consensus expected a 0.2% rise.
The YoY increase was 9%, down from 10.3% in July.
The drop was led by lower fuel prices. Ex-petroleum, prices fell 0.1% from July.
As with the Empire gauge, there’s probably not much utility in extrapolating, but as BMO’s US rates team wrote, at the margins the drop is “perhaps further evidence [that] the trajectory of reflation has shifted.”
