Empire State Manufacturing Survey: Index Falls in April, Worse Than Forecast

This morning we got the latest Empire State Manufacturing Survey, which shows subdued growth. The diffusion index for General Business Conditions at 5.2 was a decrease of 11.2 from the previous month's 16.4.

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 grew at a more subdued pace in New York State, according to firms responding to the April 2017 Empire State Manufacturing Survey. The headline general business conditions index fell eleven points to 5.2. The new orders index, which had climbed to a multiyear high in March, retreated sharply to 7.0, suggesting more modest growth. The shipments index edged up to 13.7, while the unfilled orders index slipped to 12.4. However, delivery times lengthened further, with that index climbing to a record high of 16.1. Labor market indicators pointed to further sturdy increases in both employment and hours worked. Input prices and selling prices rose at a modest pace again this month. Indexes assessing the six-month outlook continued to convey a fairly high degree of optimism. [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