The Empire State Manufacturing Survey said that manufacturing activity bounced back in June after softening in May. The composite index of general business conditions rose from -1.0 in May, its first decline in nine months, to 19.8 in June, its fastest pace since September 2014. The strong rebound was buoyed by healthy accelerations in new orders (up from -4.4 to 18.1), shipments (up from 10.6 to 22.3) and the average workweek (up from 7.5 to 8.5). The percentage of respondents saying that orders had increased in the month rose from 20.7 percent in May to 35.1 percent in June. At the same time, hiring (down from 11.9 to 7.7) slowed somewhat, even as growth in employment remained modest. The labor market has generally improved, up in four of the past six months after contracting sharply in the ten months prior to that.
Overall, manufacturers in the New York Federal Reserve Bank’s district were very upbeat about the next six months. Indeed, the forward-looking composite index ticked up from 39.3 to 41.7, matching the reading in February. At least half of those completing the survey predict better new orders and shipments in the months ahead, with 29.2 percent forecasting higher capital expenditures. With that said, the labor market figures were expected to be weaker, including employment (down from 17.2 to 12.3) and the average workweek (down from 5.2 to -5.4). The good news was hiring should continue to grow modestly, with the expected hiring index positive for the 10th straight month. Meanwhile, pricing pressures continue to be highly elevated moving forward (down from 38.1 to 33.1), even with a slight deceleration in June’s survey.