| Survey | Current | MoM | Future | Regime |
|---|---|---|---|---|
| Empire State (NY) | +7.1 | -0.6 | +34.7 | Expansion |
| Philadelphia Fed | +16.3 | +3.7 | +42.8 | Strong Expansion |
| Dallas Fed | -1.2 | +10.1 | — | Contraction |
Note: Readings above 0 indicate expansion, below 0 indicate contraction.
The January Regional Fed Composite rose to 7.4, marking a second consecutive month of expansion as two out of three major surveys trended positive. The Philadelphia Fed led the charge with a robust 16.3 reading, while the Empire State index climbed to 7.1, indicating a firming recovery in the Northeast. Although the Dallas Fed remained slightly in contraction at -1.2, its positive future activity outlook of 10.8 suggests the regional weakness may be temporary.
| Component | Current | Future |
|---|---|---|
| New Orders | +5.8 | — |
| Shipments | -1.0 | — |
| Employment | +4.0 | +26.1 |
| Prices Paid | +49.1 | — |
| Prices Received | +22.2 | — |
| Component | Current | Future |
|---|---|---|
| New Orders | +11.7 | — |
| Shipments | +0.3 | — |
| Employment | -1.3 | +14.9 |
| Prices Paid | +38.9 | — |
| Prices Received | +16.7 | — |
| Component | Current | Future |
|---|---|---|
| New Orders | -6.4 | — |
| Shipments | -10.6 | — |
| Employment | -1.1 | — |
| Prices Paid (Raw Materials) | +36.0 | — |
| Prices Received | +8.2 | — |
| Capacity Utilization | -4.5 | — |
| Capital Expenditures | +8.1 | — |
The manufacturing sector is currently in an improving expansion regime, characterized by a 12-month percentile ranking of 69%. This two-month streak of positive readings marks a significant shift from previous volatility, suggesting a more durable floor for industrial production. While the Dallas region lags with negative new orders, the overall composite trend points toward a broadening recovery across the U.S. industrial heartland.
| Index | Value | MoM | Interpretation |
|---|---|---|---|
| CFNAI | +0.18 | +0.39 | Trend Growth |
| CFNAI-MA3 | -0.06 | — | 3-Month Smoothed |
| Diffusion Index | -0.06 | — | Breadth of Expansion |
| Midwest Economy | +0.69 | — | Regional Activity |
CFNAI: 85 indicators of national economic activity. Zero = historical trend growth.
| Index | Value | MoM | Conditions |
|---|---|---|---|
| NFCI (Chicago) | -0.57 | +0.00 | Loose |
| STLFSI (St. Louis) | -0.62 | +0.03 | Normal |
| KCFSI (Kansas City) | -0.71 | +0.03 | Normal |
Financial stress indexes: Zero = average conditions. Positive = tighter/more stress.
Found 29 historical periods with Empire State readings near +7.1
On average, 3 months later: +4.0 | 6 months later: +2.7
| Date | Reading | +3 Months | +6 Months |
|---|---|---|---|
| Feb 2025 | +4.3 | -6.9 | +9.1 |
| Dec 2024 | +2.2 | -15.7 | -14.9 |
| Sep 2024 | +3.8 | +2.2 | -15.7 |
| Jun 2023 | +6.1 | -5.3 | -13.6 |
| Apr 2023 | +5.6 | -8.6 | -6.5 |
Analysis of 29 similar historical periods suggests that while the current expansion is strong, growth rates typically moderate toward a 2.7 reading within six months. Past cycles with these specific readings often preceded a period of steady but slower industrial output rather than an accelerating boom. Investors should watch for the Dallas Fed's new orders to turn positive as a confirmation of a synchronized national upswing.
| ETF | Price | Open Gap | 1M | 6M | 1Y | YTD |
|---|---|---|---|---|---|---|
| XLI Industrials | $177.23 | -0.62% | +6.5% | +18.1% | +29.5% | +14.3% |
| XLB Materials | $52.96 | -0.64% | +7.6% | +18.7% | +20.1% | +16.8% |
| XLE Energy | $54.90 | +0.25% | +12.6% | +30.2% | +23.3% | +22.8% |
| Stock | Price | Open Gap | 1M | 6M | 1Y | YTD |
|---|---|---|---|---|---|---|
| ETN Eaton Corp | $373.38 | +0.48% | +10.5% | +8.1% | +22.2% | +17.2% |
| DE Deere & Company | $662.49 | +0.27% | +25.1% | +34.9% | +31.4% | +42.3% |
| PCAR PACCAR | $128.46 | -0.05% | +4.2% | +30.8% | +20.6% | +17.3% |
| CAT Caterpillar | $759.74 | -0.10% | +17.7% | +81.2% | +117.7% | +32.6% |
| EMR Emerson Electric | $148.62 | -0.36% | -0.6% | +13.5% | +20.4% | +12.0% |
| ITW Illinois Tool Works | $294.98 | -0.43% | +13.5% | +13.3% | +13.8% | +19.8% |
| CMI Cummins | $593.28 | -0.61% | +1.9% | +50.4% | +56.1% | +16.2% |
| URI United Rentals | $909.11 | -1.15% | -3.3% | +0.8% | +28.7% | +12.3% |
| HON Honeywell | $243.97 | -1.28% | +11.3% | +12.4% | +17.6% | +25.1% |
| GE GE Aerospace | $343.22 | -1.28% | +7.8% | +29.0% | +63.8% | +11.4% |
| PH Parker-Hannifin | $1022.23 | -1.39% | +8.1% | +38.2% | +46.8% | +16.3% |
| ROK Rockwell Automation | $398.79 | -1.47% | -5.1% | +17.4% | +34.3% | +2.5% |
Strengthening regional data provides a tailwind for heavy machinery and diversified industrials like Caterpillar (CAT), Deere & Company (DE), and Honeywell (HON). Increased activity in the Philly and Empire regions specifically benefits automation and electrical players such as Emerson Electric (EMR) and Rockwell Automation (ROK). Investors can gain broad exposure to this recovery through the Industrial Select Sector SPDR Fund (XLI) and the Materials Select Sector SPDR Fund (XLB). As prices paid remain elevated, companies with strong pricing power like 3M (MMM) are best positioned to maintain margins.
Investors should maintain an overweight stance on industrials and cyclicals while the composite remains in expansion territory. The favorable financial conditions, evidenced by a -0.57 NFCI reading, provide the liquidity necessary for capital expenditure growth. A reversal in the Philly Fed's new orders or a drop in the composite below zero would signal a need to rotate back into defensive sectors.