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Editor's Note: Below is a brief excerpt from today's Early Look written by U.S. Macro analyst Christian Drake. Click here to learn more about the Early Look.

Empire State Manufacturing:  

  • The Data:  Empire State Manufacturing Index retreated -2.4pts sequentially to 22.6 to kick off the Fed Regional Survey data for July. 
  • The Detail:  The Current Conditions, Forward Expectations, New Orders and Capex Plans series all moderated sequentially.  On the other side, Expected New Orders increased and the Prices Paid and Delivery Times both improved, suggesting raw materials and (transportation) bottlenecks are ebbing on the margin.  
  • The Distillation:  The Chart of the Day below shows our New Orders Composite for the Fed Regional Surveys.   We’re just south of cycle highs for the full set of June data and we’ll update it as the Regional data continues to roll in for July but the broader read through is that manufacturing and industrial activity will remain solid nearer-term.   The continued slide in Capex Plans, however, leaves the door open for ongoing counterfactual speculation around the impact of trade policy on corporate confidence and business investment and further reinforces the proclivity for tax cuts to fund financial engineering in lieu of large-scale productive investment.

CHART OF THE DAY: Fed Regional Surveys = Just South of Cycle Highs - New Orders Fed Regional Composite CoD

CHART OF THE DAY: Fed Regional Surveys = Just South of Cycle Highs - early look