US: Empire State Survey remains elevated with trade fears caveat - Nomura

The Empire State manufacturing survey’s business conditions index declined to 15.8 in April (Nomura: 18.0, Consensus: 18.4), from 22.5 the previous month, indicating continued growth, but at a slightly slower pace, explains the research team at Nomura.

Key Quotes

“Forward-looking optimism among manufacturers, measured by the index for future business conditions, plummeted 25.8 points to 18.3, potentially a result of increased trade protectionism rhetoric over recent weeks.”

“Looking closer at current conditions, the new orders index decreased 7.8pp to 9.0, its lowest reading since May 2017, indicating some softening in momentum. The shipments index also declined to 17.5 (-9.5pp) a still-elevated reading, but one pointing to less contemporaneous factory activity. Employment indicators sent mixed signals as the number of employees index declined 3.4pp, while the average employee workweek picked up by 11pp.”

“For the forward-looking indicators, besides the drop in overall forward-looking sentiment, the new orders index dropped sharply (-24.5pp to 18.5), while the prices paid index remained elevated at 54.8, hinting at some concern among manufacturers of slow growth but higher prices.”

“At the moment, it remains unclear how much of the decline in sentiment in the Empire survey can be attributable to the recent flare up in trade tensions. However, we should get additional insight from the Philly Fed manufacturing index release on Thursday.”