USA Today headlined a piece on new numbers on manufacturing: "reports on factory sector suggest economy is improving." Since the Fed had just reported that manufacturing output had fallen another 0.6 percent in June, the basis for the good news touted in the headline was not obvious. It turns out that the New York Fed's Empire State General Business Conditions Survey rose to minus 0.55 in July from minus 9.41 in June. Of course a reading of minus 0.55 is better than a reading of minus 9.41, but this reading is still negative. The index reports the number of businesses who say that conditions are improving minus the number who say that conditions are deteriorating. The negative reading for July means that more businesses still see the economy as getting worse than see it as getting better, even if they see it as deteriorating at a slower rate. That's a step in the right direction, but things are still heading down.
--Dean Baker
