Empire State Factory Index Declines in July

The Federal Reserve Bank of New York reported that its index of factory sector activity fell to 1.1 during July from 6.6 in June. It was the third positive reading in four months following negative figures during most of the prior year. The most recent survey was taken between July 3 & July 11. A reading of -3.5 had been expected in the Action Economics Forecast Survey.

Haver Analytics constructs an ISM-adjusted series, which is comparable to the ISM manufacturing index. This calculated index fell to 50.4 in July from 51.5 in June, remaining above the low of 43.5 in May. A level of 50 is the break-even point between rising and falling activity.

A lessened 28.6% of survey respondents reported improved overall business conditions last month while an increased 27.4% reported deterioration. This headline index reflects the answer to only one question concerning general business conditions and is not calculated from the components listed below.

Individual series were mixed this month. The new orders reading edged up to 3.3 from 3.1 in June after plunging to -28.0 in May. A steady 30.9% of respondents reported higher new orders while a fairly steady 27.6% reported fewer. The shipments index fell sharply to 13 .4 after jumping to 22.0 in June. The unfilled orders index was little changed at -8.8. The delivery time index weakened to -6.9 from -1.0, suggesting shorter delivery times.

The employment index strengthened to 4.7 from -3.6 and was at the highest level in six months. Growing employment was suggested by 17.6% of survey participants while 12.9% reported a decline. The average workweek index of 0.3 was improved from a March low of -18.5.

Pricing power deteriorated this month. The prices paid index fell to 16.7 from 22 in June. It reached a high of 86.4 in April 2022. A lessened 30.4% of respondents reported paying higher prices for inputs while an increased 13.7% paid less. The prices received index declined to 3.9, its lowest point since July 2020. A lessened 13.7% of respondents reported receiving higher prices while an increased 9.8% reported receiving lower prices.

The index of expected general business conditions in six months fell moderately to 14.3 in July, but remained up from a low of -6.2 in July of last year, suggesting that firms expect improvement in business conditions overall. New orders, shipments & employment each fell m/m but have been trending higher for several months. Expected prices paid remained near their low, down sharply from the January 2022 high. Expected prices received improved moderately. The capital expenditures reading fell sharply.

The N.Y. Fed survey data are contained in Haver’s SURVEYS database. The expectations series is in Haver’s AS1REPNA database.