|Source: Liberty Street Economics|
The Empire State Manufacturing Survey conducted by the Federal Reserve Bank of New York was released yesterday. The general business conditions index climbed four points to 3.1% indicating "that business conditions improved slightly for New York manufacturers." New orders rose ten points to 3.9, shipments were flat and labor market indicators "point to a small increase in employment levels but a slight decline in the average workweek." Prices paid fell ten points to 9.4, the lowest level in almost three years. The Supplemental Survey Report, which provides past and expected changes in prices, will be released May 18 at 8:30 a.m.
Industrial production was released by the Fed on Friday. The index decreased 0.3% in April -- its fifth consecutive monthly loss. Manufacturing output was flat, the mining index was down .8%, its fourth consecutive monthly decrease.
The Federal Reserve Bank of New York (FRBNY) hosts the Economic Advisory Panel (EAP) in spring this year and the staff are presenting a forecast for "U.S. growth, inflation, and unemployment through the end of 2016." This is a short article and I highly recommend you read it in its entirety as it provides an overview of the Fed's view on the economy. This IS the staff recommendation to CEO Dudley and he will likely discuss it with Yellen. "After a period of robust growth during the middle of 2014," the post states, "GDP growth slowed to near zero in the first quarter of 2015, a performance reminiscent of last year." The staff attributes this weakness to "transitory factors", in other words, the Fed does not see this as a long term problem. As a result, the staff forecast anticipates "that growth will rebound to around 2½ percent (annual rate) over the remainder of 2015 and 2016." The forecast goes on to say, "We see many of the underlying fundamentals of the economy as positive for growth, with household wealth and real income solid, fiscal policy slightly stimulative, and monetary policy still accommodative." Can you say rate hike?