Empire State Mfg Survey: Activity Levels Off

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at -1.2 was an increase of 10.4 from the previous month's -11.6. The Investing.com forecast was for a reading of 3.0.

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.

After declining last month, manufacturing activity held steady in New York State, according to the June survey. The general business conditions index climbed ten points to -1.2. Twenty-eight percent of respondents reported that conditions had improved over the month, and twenty-nine percent reported that conditions had worsened. After plunging below zero last month, the new orders and shipments indexes climbed into positive territory, pointing to a small increase in both areas. The unfilled orders index fell to -4.3, its first negative reading in over a year, indicating that unfilled orders shrank. The delivery times index fell six points to 14.5, suggesting that delivery times lengthened, though at the slowest pace in over a year. T he inventories index rose nine points to 17.1, indicating that inventories expanded. [Full report]

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

Since this survey only goes back to July of 2001, we only have two complete business cycles 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. We saw a gradual decline in 2015 that picked up in 2016, with a giant dip in 2020 due to COVID-19.

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