NY Manufacturing Outlook Solid, International Investors' Demand for US Assets Accelerates

- Empire Manufacturing for August rose to 23.0 versus estimates of 18.5 and a reading of 23.9 in July.
- Net Foreign Security Purchases for June rose to $71.2B versus estimates of $64.5B and $55.8B in May.

BOTTOM LINE: Manufacturing in New York state expanded more than expected in August as new orders surged to a high for the year, Bloomberg reported. The new orders component of the index soared to 33.8 from 19.2 in July. Manufacturers’ optimism about the next six months rose to 53.3 from 47 in July. The current employment gauge within the index rose to 10.2 from 1.4 the prior month. Finally, the prices paid component of the index rose to 29 from 21.57 in July. Bloomberg is now forecasting the US economy will growth at a 4.1% rate this quarter, the most since the first quarter of 2004, according to a recent survey. I continue to believe that manufacturing will add to US GDP growth throughout the remainder of the year.

International investors increased their holdings of US assets in June by the most in four months, led by record purchases of corporate bonds, Bloomberg reported. The US economy grew 3.6% during the second quarter, more than twice the rate in Japan, Germany, the UK and France. Demand for US assets will likely remain strong as the US dollar firms, the budget deficit improves and the gap between US growth and other industrialized nations widens further.