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Will manufacturing finally get out of contraction?

USD Continues the Comeback, After Strong Empire State Manufacturing

Posted Monday, April 17, 2023 by
Skerdian Meta • 2 min read

The USD made a strong comeback last Friday after being bearish for several weeks. The prelim UoM consumer sentiment showed an improvement this month, while the UoM inflation expectations increased by 1%. Besides that, FED’s Waller mentioned more rate hikes, which is very uncertain but helped improve the sentiment for the USD.

Today the Dollar was advancing higher across the board, albeit slowly. But it picked up pace after the jump in the Empire State manufacturing index for New York state. The index rose to 10.8 points from -24.6 in March, surpassing expectations. The new orders index and shipments index also saw significant increases after declining in the previous few months.

This report has increased expectations that the FED will raise interest rates in May. Futures trading showed a higher probability of the FED hiking rates by 25 bps again, to a range of 5.00%-5.25% in May. The outlook of higher US interest rates relative to other countries is helping the USD, with EUR/USD almost in reach of 1.09 and USD/JPY jumped around 8o pips as it heads for 135.

The Bank of Japan has indicated that it will continue its easy-money policies, helping this pair rise to its highest level since March 15. The GBP and the Canadian dollar all lost value against the dollar.

Details of the New York Fed manufacturing index for April 2023

Empire fed

Empire fed manufacturing index rises to 10.8
  • Manufacturing index for April 10.8 points versus -18.0 estimate
  • March manufacturing index was -24.6 points
  • Empire manufacturing index 10.8 points versus -18.0 expected
  • New orders 25.1 points versus -21.7 last month
  • Shipments 23.9 points versus +13.4 last month
  • Prices paid 33.0 points versus 41.9 last month
  • Employment -8.0 points versus -10.1 last month
  • prices received 23.7 points versus +22.9 last month
  • Inventories 8.2 points versus -1.9 last month
  • Delivery times 0.0 points versus -7.6 last month
  • Unfilled orders 0.0 points versus -6.7 last month

six-month forward

  • 6 month business conditions 6.6 versus 2.9 last
  • new orders 6.6 versus 613 last month
  • shipments 7.6 versus 13.3 last month
  • unfilled orders -3.1 versus 5.7 last month
  • delivery time -2.1 versus -7.6 last month
  • inventory is -5.2 versus -11.4 last month
  • prices paid 37.1 versus 31.4 last month
  • prices received 29.9 versus 27.6 last month
  • employees 13.4 versus -4.1 last month
  • average employee work week 5.2 versus 6.7 last month
  • capital expenditures 16.5 versus 13.3 last month
  • technology spending 10.3 versus 13.3 last month

The data for the Empire manufacturing can swing around. Last month the number came in at -24.6 will versus expectations of -8.0.

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