Empire State Manufacturing Survey: Activity Little Changed

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions rose 20.9 points from last month to 1.9. This morning's reading was better than the forecast of -10.0 and pushes the index back into expansion territory.

Background on the Empire State Manufacturing Survey

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, and below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state. This month's responses were collected between September 5th-12th.

Here is the opening paragraph from the report.

Business activity was little changed in New York State, according to firms responding to the September 2023 Empire State Manufacturing Survey. The headline general business conditions index rose twenty one points to 1.9. New orders and shipments increased. Delivery times remained steady, and inventories continued to contract. Labor market indicators pointed to a slight decline in employment levels and the average workweek. The pace of input price increases was similar to last month, while selling price increases picked up. Looking ahead, firms continued to grow more optimistic about the six month outlook. [Full report]

Below is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator. The current 3-month moving average is -5.3, down 1.6 points from last month.

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 rose back up in 2016, with a giant dip in 2020 due to COVID-19. The index quickly picked up again in 2021 but has been declining since the start of 2022.