This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 21.1 was an increase of 2.1 from the previous month’s 19.0.

The Investing.com forecast was for a reading of 20.4.

The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.

Here is the opening paragraph from the report.

Business activity continued to grow strongly in New York State, according to firms responding to the October 2018 Empire State Manufacturing Survey. The headline general business conditions index rose two points to 21.1, pointing to a slightly faster pace of growth than in September. New orders and shipments both picked up noticeably. Delivery times continued to lengthen, while inventories held steady. Labor market indicators pointed to a modest increase in employment levels and no change in hours worked. Price indexes edged down but remained elevated, suggesting ongoing significant increases in both input prices and selling prices. Looking ahead, firms generally remained optimistic about the six-month outlook. [source]

Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Click this link to access a PDF set of charts of the individual components over the past 12 months.

Since this survey only goes back to July of 2001, we only have one complete business cycle with which to evaluate its usefulness as an indicator for the broader economy. Following the Great Recession, the index has slipped into contraction multiple times, as the general trend slowed. We saw a gradual decline in 2015 that began picking up in 2016.

Here is an overlay of the current and future conditions (a six-month outlook).