The September readings of the general business conditions indexes in the New York and Philadelphia Feds surveys of manufacturing moved in different directions. However, in the end, they appear to be telling much the same story.

The New York general business conditions index recovered much of its plunge to a record low of minus 31.3 in August and rose 29.8 points to minus 1.5 in September. The Philadelphia Fed general business conditions index was 6.2 in August and lost 16.1 points to minus 9.9 in September. Both indexes have exhibited swings since April – New York more than Philadelphia. Both indexes are diffusion indexes and a measure of respondents’ perceptions of conditions. Cutting through the noise is difficult. The underlying theme seems to be an uneven trend lower to modest contraction for their respective factory sectors. Both are trying to navigate their way through a period of change and risks to the outlook from global recession, persistent inflation, and rising interest rates.

The brighter side of the reports is that both surveys anticipated improvement in future manufacturing activity about six months from now. The New York survey was slightly more optimistic with an increase of 6.1 points to 8.2, its highest since 14.0 in June. The corresponding index in the Philadelphia survey was up 6.7 points to minus 3.9, its highest since 2.5 in May. Neither of these could be deemed as particularly optimistic about the near future, but worries about the harm of higher interest rates and a possible recession appear to have eased.

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