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Empire State Manufacturing Declined for Fourth Consecutive Month

November 16, 2015

by Jill Mislinski

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at -10.7 (-10.74 to two decimals) shows a fractional increase from last month's -11.6, which still signals a decline in activity. These are some of the lowest levels since 2009.

The forecast was for a reading of -6.0.

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 November 2015 Empire State Manufacturing Survey indicates that business activity declined for a fourth consecutive month for New York manufacturers. The headline general business conditions index was little changed at -10.7. New orders and shipments also declined, although at a slower pace than last month. Price indexes suggested that input prices increased slightly, while selling prices were slightly lower. Labor market conditions continued to deteriorate, with survey indicators pointing to a decline in both employment levels and hours worked. Indexes for the six-month outlook were little changed from last month, and suggested that optimism about future conditions remained tepid, even though employment is expected to increase.

Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Empire State Manufacturing

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 0.5 point increase from last month.

Here is an overlay of the current and future conditions (a six month outlook).

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

ISM Manufacturing PMI

Let's compare all five Regional Manufacturing indicators. Here is a three-month moving average overlay of each since 2001 (for those with data).

Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions - this averages out to approximately zero for the average, which is flat and neither expanding nor contracting.

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

Here are the remaining four monthly manufacturing indicators that we track:

Texas Manufacturing Outlook Survey (TMOS)

Kansas City Manufacturing Survey

Fifth District Manufacturing Survey (Richmond)

Philadelphia Fed Manufacturing Business Outlook Survey

Regional Fed Overview