New York Empire State, Philadelphia Fed factory indexes mixed but show signs of optimism

The New York Federal Reserve’s Empire State Index, meanwhile, jumped to a reading of 6.6 in June from negative 31.8  in the prior month, the New York Fed said. Economists had expected a reading of negative 16, according to the Wall Street Journal. The index had in negative territory for five of the past six months.

Any reading below zero indicates deteriorating conditions.

Key details: In key subcomponents in the Philadelphia survey, new orders fell to negative 11 in June from negative 8.9 in the previous month. On the positive side, shipments in Philadelphia rose to 9.9 from negative 4.7 in May. In addition, the index of future activity jumped to 12.7 in June from negative 10.3 in the prior month.

New orders in the New York region rebounded 31.1 points to 3.1 in June. Shipments jumped 38.4 points to 22 in the region. The index for future business conditions increased 9.1 points to 18.9. suggesting firms have become more optimistic.

Big picture: U.S. manufacturing has been struggling in recent months even though the impact on supply chains from the pandemic has eased.

Economists use the regional data to get early read on the national U.S. ISM factory index.

In May, the ISM dipped to 46.9%, signaling contraction in the manufacturing sector for the seventh consecutive month. The June data will be released in two weeks.

What are they saying? ” The big picture in manufacturing appears to be that the deterioration is over, but the sector remains in recession,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Market reaction: Stocks
DJIA,
+1.26%

SPX,
+1.22%
were higher in early morning trading on Thursday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.737%
slipped to 3.725%.