New York Manufacturing Survey Validates The Fed

The key takeaway from Wednesday’s FOMC meeting: despite encouraging inflation news, the Fed believes they have a long inflation fight ahead. Central to the Fed’s outlook is the extremely tight labor market. The best source of real-time employment data, initial jobless claims, fell this past week and resides at very low levels. As we share below, continuing jobless claims are rising, but they are only half the average rate of the last ten years. The New York Empire State Manufacturing Index affirms the Fed’s concerns. While the broad index fell in December, the components used to gauge future inflation rose. For example, prices paid were flat versus last month, but the percentage of those surveyed reporting lower prices fell to 0%. Regarding labor, the number of employees index rose.

Within the New York survey are forward-looking indicators. An increasing number of manufacturers in the New York region think prices will be higher in six months. Further, a decreasing number of respondents believe they will be lower. The Fed deeply values inflation expectations. The New York survey and relatively solid labor markets affirm the inflation fight is far from over.

price and labor expecations

What To Watch Today


  • 9:45 a.m. ET: S&P Global U.S. Manufacturing PMI, December Preliminary (46.9 expected, 46.4 prior)
  • 9:45 a.m. ET: S&P Global U.S. Services PMI, December Preliminary (47.8 expected, 47.7 prior)
  • 9:45 a.m. ET: S&P Global U.S. Composite PMI, December Preliminary (46.5 expected, 46.2 prior)



Market Trading Update

A more hawkish than expected Fed led to a sharp selloff on Thursday. Such was not unexpected, as noted in yesterday’s commentary. However, the market broke the recent month-long trading range to the downside and took out the critical support at the 100-DMA. A test of the 50-DMA is next, with little support below that until a retest of previous lows.