May Empire FED Manufacturing Index Preview
The May Empire State Manufacturing Index is expected at 0 from 0.6 in Apr. and -22.23 in Mar., which was the lowest reading since the survey’s inception in ’01.
The Empire FED Index’s New Orders, Employment, and Work Week components were all unchanged in Apr. Prices Received were 20.83 and Prices Paid were 57.29, the highest reading since ’05.
The Empire FED Index is the first of the 4 major manufacturing reports published each month and therefore is very difficult to predict. Analysts have correspondingly issued a relatively wide range of estimates from an index reading of 10 to -10 with an average estimate at -1.2.
Even with a benign reading in May, the Empire State index would still be performing better than expected given the recessionary landscape in the US economy, especially in the manufacturing sector.
Recent sentiment reports continue to show readings better than those typically associated with recession. Nonetheless, consumer confidence waned marginally in Apr. according to both the Conference Board and U of M consumer confidence reports.
Higher import prices and energy costs for manufacturers should be mitigated somewhat by an increase in exports as the weak USD has boosted the appeal of American goods abroad.
The May Empire State Index will set the stage for the May ISM manufacturing index as well as Chicago PMI and the Philly Fed Index. All the aforementioned indices are expected to show modest improvements in May when factoring in current estimates for the NY FED Index. A lower-than-expected reading is likely to yield downward revision to forecasts for the other major manufacturing reports.