Empire State Manufacturing Doesn't Meet Expectations

By Doug Short
April 15, 2014

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This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions was flat, posting a reading of 1.3, down from 5.6 last month. The Investing.com forecast was for a much stronger reading of 8.0. 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 April 2014 Empire State Manufacturing Survey indicates that business activity was flat for New York manufacturers. The headline general business conditions index slipped four points to 1.3. The new orders index fell below zero to -2.8, pointing to a slight decline in orders, and the shipments index was little changed at 3.2. The unfilled orders index remained negative at -13.3, and the inventories index dropped ten points to -3.1. The prices paid index held steady at 22.5, indicating continued moderate input price increases, and the prices received index rose to 10.2, pointing to a pickup in selling price increases. Employment indexes showed a modest rise in employment levels and a slight increase in the average workweek. Indexes for the six-month outlook continued to convey a good deal of optimism about future conditions, and the capital expenditures index climbed seven points to 23.5, its highest level in several months.

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 multiple times, as the general trend slowed. It has remained in a relatively narrow range over the past year, with last month as the interim high.

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.

 

 

 

 

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