Empire State Manufacturing Survey: Slight Dip in March, Continued Growth

This morning we got the latest Empire State Manufacturing Survey, which shows continued growth. The diffusion index for General Business Conditions at 16.4 was a slight decrease of 2.3 from the previous month's 18.7.

The Investing.com forecast was for a reading of 15.0.

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.

Business activity continued to grow at a solid clip in New York State, according to firms responding to the March 2017 Empire State Manufacturing Survey. The headline general business conditions index edged down two points to 16.4. The new orders index climbed to 21.3, its highest level in several years, pointing to a substantial increase in orders. The shipments index moved down to 11.3, indicating that shipments increased at a slower pace. The unfilled orders index rose to 14.2, its highest level in more than a decade, and delivery times lengthened. Labor market conditions pointed to an increase in both employment and hours worked. Input prices and selling prices increased at a slower pace this month. Indexes assessing the six-month outlook, although generally somewhat lower, continued to convey a high degree of optimism about future conditions. [source]

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. 2015 saw a gradual decline that picked up in 2016.

Here is an overlay of the current and future conditions (a six-month outlook). The future conditions index is still optimistic after the January Presidential election.

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

ISM Manufacturing PMI