Release Explanation: The Empire State Manufacturing Index is a survey of Manufacturing activity in the Fifth Federal Reserve District (It covers New York State, the 12 northern counties of New Jersey and Fairfield County in Connecticut.). It attempts to index economic activity by polling participants in regards to shipments, new orders, capacity utilization, employment, inventory, and raw materials. The Economic impact of the data has declined over the last two decades as manufacturing activity in the region moves to less expensive areas. However, like the other regional indexes, it will feed into the GDP release.

GDP is directly affected by the manufacturing activity in the country, of which the New York region is a component off. Durable goods and other releases such as Industrial output can be affected by the Richmond Fed activity. The currency may experience a slight movement on the release, but the significance of the data will be filtered down to Durable Goods and GDP, where the impact may be more significant.

Trade Desk Thoughts: Manufacturing in the New York region weakened to the lowest level on record in March, the Federal Reserve Bank of New York said today. The index fell to a reading of -38.2 for the month, lower than the -31.5 economists had expected to see, and down sharply from the -34.7 seen in February.

The report is a disaster, said Matthew Carniol, chief currency strategist at There's evidence of increasing deflationary pressures and the employment components in both the number of jobs and in hours worked remained extremely weak.

Just 10% of respondents reported that conditions had improved over the month, while 48% reported that conditions had worsened.

The new orders index plunged 14 points to -44.8, eclipsing the record low set last month. The shipments index also set a record, dropping 19 points to -26.7. The inventories index fell sharply, to -27.0, with nearly 40% of respondents reporting lower inventories in March.

The indexes for both prices paid and prices received remained negative. The prices paid index was little changed from February, at -14.6; the prices received index fell to -23.6.

The index for number of employees hovered near its recent record low, at -38.2, and the average workweek index, although up slightly from last month, remained quite low at -23.6.

Future indexes showed continuing weakness, suggesting that the six-month outlook remains subdued. The future general business conditions index turned positive in March, but just barely so, and was very low by historical standards. The index rose 10 points to 3.1.

The future inventories index drifted downward to -20.2, nearing a record low set in October of last year. The future prices paid index was at zero, while the future prices received index fell several points to -14.6. Future employment indexes rose, but remained below zero.

Forex Technical Reaction: S&P futures have been rising overnight and the dollar has weakened against the better-yielders after Fed Chairman Bernanke said during an interview last night that should the government succeed in calming financial markets, the recession will probably end this year and the economy will expand in 2010.