Empire State Manufacturing: Expansion Continues

November 17, 2014

by Doug Short

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions continued expanding at a stronger pace from the previous month. The headline number rose 4 points to 10.2, up from 6.2.

The Investing.com forecast was for a reading of 11.1.

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 2014 Empire State Manufacturing Survey indicates that business activity continued to expand for New York manufacturers. The headline general business conditions index climbed four points to 10.2, indicating a pace of growth somewhat faster than last month’s. The new orders index rose eleven points to 9.1, and the shipments index advanced eleven points to 11.8. The index for number of employees edged down to 8.5 but remained positive, indicating that employment levels grew; the average workweek index, by contrast, was negative, pointing to a decline in hours worked. After falling sharply last month, the prices paid index was little changed at 10.6—a sign that input prices had increased only modestly. The prices received index fell to zero, indicating that selling prices were flat. Indexes for the six-month outlook were generally higher this month and conveyed 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 to View
Click for a larger image

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. We saw a strong increase sustained since May of this year. But the latest number was a disappointing drop.

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

Click to View
Click for a larger image

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

Website by the Boston Web Company