Empire State Manufacturing Contracts:
General Business Conditions Lowest Since January
This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions disappointed expectations, posting a contractionaly reading of 2.21, down from 1.52 last month. This is the lowest reading since the contractionary -7.78 in January. The Investing.com forecast was for 5.0. As Investing.com points out, "The Empire State Manufacturing Index rates the relative level of general business conditions New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state."
Here is the opening paragraph from the report.
The November 2013 Empire State Manufacturing Survey indicates that manufacturing conditions weakened somewhat for New York manufacturers. The general business conditions index fell four points to -2.2, its first negative reading since May. The new orders index also entered negative territory, falling thirteen points to -5.5, and the shipments index moved below zero with a fourteen-point drop to -0.5. The prices paid index fell five points to 17.1, indicating a slowing of input price increases. The prices received index fell to -4.0; the negative reading was a sign that selling prices had declined—their first retreat in two years. Labor market conditions were also weak, with the index for number of employees falling four points to 0.0, while the average workweek index dropped to -5.3. Despite the negative readings registered by many of the indexes for current activity, indexes for the six-month outlook continued to convey a strong degree of optimism about future business conditions.
Here is a chart illustrating both the General Business Conditions and Future General Business Conditions (the outlook six months ahead):
Click this link to access a PDF set of charts of the individual components over the past 12 months.
Since this survey only goes back to July of 2001, we only have one complete business cycle with which to evaluate its usefulness as an indicator for the broader economy. Following the Great Recession, the index has slipped into contraction five times, the most recent being the latest data point. However the expansionary interim highs since the post-recession peak in October 2009 have gotten successively smaller, which is indicative of a generally slowing regional economy.
Meanwhile, here's another look at the latest ISM Manufacturing Business Activity Index.
I'll keep a close eye on some of the regional manufacturing indicators in the months ahead.