Empire State Manufacturing Survey: Activity Declines Modestly in June

Manufacturing activity declined modestly in New York State, according to the Empire State Manufacturing June survey. The diffusion index for General Business Conditions rose to -6.0 from -15.6 in May. The latest reading was better than the forecast of -12.5.

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 declined modestly in New York State, according to firms responding to the June 2024 Empire State Manufacturing Survey. The headline general business conditions index moved up ten points but remained below zero at -6.0. New orders held steady, while shipments inched higher. Delivery times shortened somewhat, and supply availability—a new monthly indicator now included in these reports—was little changed. Inventories were flat. Labor market conditions remained weak, with employment and hours worked continuing to contract. The pace of input and selling price increases moderated slightly for a second consecutive month. Despite current activity remaining weak, optimism about the six-month outlook picked up to its highest level in more than two years.

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 -12.0, the highest level of the year.

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.