Manufacturing activity declined slightly in New York State, according to the Empire State Manufacturing August survey. The diffusion index for General Business Conditions was little changed at -4.7. The latest reading was better than the forecast of -5.9.
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 August 2024 Empire State Manufacturing Survey. The headline general business conditions index was little changed at -4.7. New orders declined modestly, while shipments held steady. Delivery times continued to shorten, and supply availability was little changed. Inventories moved lower for a second consecutive month. Labor market conditions remained weak, with employment continuing to contract and the average workweek dropping sharply. Input prices increased at a slightly slower pace than last month, while selling price increases remained steady and small. Firms were fairly optimistic that conditions would improve in the months ahead.
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 -5.8, the highest level of the year.
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 kicked off 2024 with a sharp decline but has started to rise during the back half of the year.
