NY Fed manufacturing index posts surprise jump in June

Manufacturing sector activity in the New York state area stabilised unexpectedly in June.

The Federal Reserve Bank of New York's regional manufacturing gauge bounded back from the prior month's sharp fall to -48.5 to -0.2.

That was significantly ahead of the median forecast from economists for an improvement to -28.5.

Monday's reading pointed to upside risk for the Philly Fed index due out on Thursday, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

However, the same economist stressed that the surprisingly stronger-than-expected reading did not mean that manufacturing activity was back to where it was at pre-Covid-19.

"This is a pleasant surprise, but it does not mean manufacturing activity has returned to normal; the index measures rates of change, not levels," Shepherdson explained.

"This survey, therefore, suggests merely that manufacturing has stabilized; the ground lost in the past couple of months is not yet being recovered."

The biggest improvement among the various subindices contained in the report was seen in that for new orders, which jumped from -42.4 to -0.6.

Policymakers at the NY Fed are charged with the Second Federal Reserve District, which includes New York state, the 12 northern counties of New Jersey, Fairfield County in Connecticut, Puerto Rico and the US Virgin Islands.

"The Empire State survey is not always a reliable guide to other regional surveys or the national ISM index, but these data do point to upside risk, especially for Thursday’s Philly Fed index. The consensus forecast is an increase to -24 freom -43.21; a reading near zero now seems a better bet."