Empire State Manufacturing: A Welcome Bounce from Last Month's Contraction

January 15, 2015

by Doug Short

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions bounced back after last month's mild contraction. The headline number rose 11 points to 10.0.

The Investing.com forecast was for a reading of 5.00.

The Empire State Manufacturing Index rates the relative level of general business conditions in 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 January 2015 Empire State Manufacturing Survey indicates that business activity expanded for New York manufacturers. The headline general business conditions index climbed eleven points to 10.0. This month’s survey also showed modest growth in new orders and shipments. Labor market conditions were mixed, with the index for number of employees rising several points to 13.7, while the average workweek index remained negative at -8.4. Both the prices paid and prices received indexes came in at 12.6, indicating a continued modest increase in input prices and selling prices. As has been the case for much of the past year, indexes for the six-month outlook pointed to widespread optimism about future conditions.

Here is a chart illustrating both the General Business Conditions and Future General Business Conditions (the outlook six months ahead):

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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 had remained in a relatively narrow range over the past year. The latest reading is a welcome bounce from last month's mild contraction.

Meanwhile, here's another look at the latest ISM Manufacturing Business Activity Index.

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I'll keep a close eye on some of the regional manufacturing indicators in the months ahead.

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