Charts and analysis provided by David N. Frazier: Editor of the ETF Strategist
The Federal Reserve Bank of New York announced this morning that its Empire State Manufacturing Index, which reveals the economic expectations of manufacturing executives in the state of New York, rose to 9.53 this month, from 0.61 during November. Meanwhile, the Federal Reserve Bank of Philadelphia announced that its index of manufacturing activity rose to 10.3, from 3.6 during November.
The Empire State Manufacturing Index trended higher during the past two months after bottoming during October.
With both the shipments and new orders component of the New York Fed's manufacturing index rising sharply this month, and general business conditions in the Philadelphia area improving considerably during the first half of December, there's a good chance that manufacturing activity in the New York and Philadelphia regions will continue to improve during the next couple of months. Meanwhile, substantial increases in manufacturing employment reported by both the New York and Philadelphia Fed reveal that the employment situation in the United States continued to improve this month.
The factors and developments mentioned above indicate that the pace of economic growth in the United States will increase during the next couple of months and that the Federal Reserve will therefore be able to reduce its purchases of U.S. government securities without negatively impacting the U.S. economy.