Empire and Import/Export prices

The Empire State manufacturing survey was in line with expectations rising to 19.57 in June from 19.11 in May. Of note new orders were strong, but weakness was seen in jobs and unfilled orders. Input prices fell sharply (to 27.16 from 44.75) while prices received softened (4.94 from 5.26), suggesting the rising orders trend is not spilling over to prices.

There was a special question on capex that may be interesting for investors. Nearly twice as many firms were looking to expand capex (46%) as cutting (25%). Last June it was 56% looking to cut capex and 20% planning to increase. Specific categories on increased capital investment include technology (software/PCs) and non-computer equipment. Spending on structures was expected to be cut.

Separately, the import/export price indices show a favorable shift in the terms of trade and import prices fell and export prices rose.

Import prices fell 0.6%, about half what the consensus expected and follows a 1.1% increase in April. Most of this reflected a 5% decline in petroleum prices, the biggest drop in a couple years. Excluding petroleum and other fuels, import prices would have risen by 0.5%. Capital goods import prices rose 0.2%. Export prices in contrast were up 0.7% in May after a 1.2% increase in April. Excluding agricultural goods, export prices were up 0.6% following a 1.3% rise in April.

On balance, the data points to some upside risk for the upcoming PPI and CPI reports.