Empire State Manufacturing Survey: Activity Edges Lower in February

Manufacturing activity edged slightly lower in New York State, according to the Empire State Manufacturing February survey. The diffusion index for General Business Conditions rose to -2.4 from -43.7 in January. This morning's reading was better than the forecast of -13.7.

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.

Here is the opening paragraph from the report.

Business activity edged slightly lower in New York State, according to firms responding to the February 2024 Empire State Manufacturing Survey. The headline general business conditions index rose forty-one points but remained negative at -2.4. New orders declined modestly, while shipments edged higher. Unfilled orders continued to shrink, and delivery times continued to shorten. Inventories declined. Employment levels were little changed, while the average workweek fell. The pace of input price increases picked up for a second straight month, and the pace of selling price increases also steepened. The six-month outlook improved, though optimism remained subdued. [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 -20.2, down 3.8 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, declined for 2022, and gradually rose in 2023. However, the index has kicked off 2024 with a sharp decline.