U.S. Empire State Manufacturing Index Edges Lower in October
by:Tom Moeller
|in:Economy in Brief
Summary
- Business activity index turns negative; new orders & shipments lead decline.
- Employment & hours improve; unfilled orders & delivery times readings fall sharply.
- Inflation pressures are muted.
- Six-month outlook eases, but improves from last year.
General Business Conditions index fell to -4.6 in October from 1.9 in September. The figure was been negative for two of the last three months, according to the Federal Reserve Bank of New York. A reading of -6.0 had been expected in the Action Economics Forecast Survey. The percentage of respondents reporting an increase in business conditions fell to 24.1% from 26.6% in September while the percentage reporting a decrease rose to 28.7% from 24.8%.
Haver Analytics constructs an ISM-adjusted series, which is comparable to the ISM manufacturing index. The index fell to 49.2 from 51.1. It remained up from a low of 43.5 in May. A level of 50 is the breakeven point between expansion and contraction.
The new orders index fell to -4.2 last month from 5.1 in September, but remained increased from –19.9 in August. A lessened 27.1% of respondents reported higher orders while an increased 31.3% reported a decline. The shipments index declined to 1.4 after rising to 12.4 in September, but remained down from a high of 23.9 in April. The unfilled orders index dropped to -19.1 in October from -5.2 in September. It was the lowest reading since May 2020, negative for the sixth consecutive month. The delivery times reading fell to -6.4 last month from 2.1. Working higher, the inventories index rose to -2.1 from -6.2, indicating inventory decumulation for the sixth consecutive month.
The employment index rose to 3.1 in October from -2.7 in September, but remained below a high of 14.0 in December. An increased 14.8% of respondents reported increases in employment while a steady 11.7% reported lower employment. The average workweek reading increased to 2.2 last month from -5.0 in September. It was the strongest reading since November of 2022.
Inflation pressures were tame last month. The prices paid index eased to 25.5 from 25.8. The index was improved from 16.7 in July but was well below the April 2022 high of 86.4. Thirty-three percent of respondents reported higher prices while a higher 7.4% reported a decline. The prices received index fell to 11.7 from 19.6 in September. Its low was 3.9 in July. The index remained down from 28.4 in February. A lessened 18.1% of respondents reported higher prices received in September while an increased 6.4% reported lower prices received.
Expectations for the next six months remained positive. Though the index for future business conditions eased to 23.1 in October from 26.3 in September, it remained near the highest level since March 2022, up from a July 2022 low of -6.2, indicating firms were more optimistic about future business conditions. Expectations for employment & hours worked improved but most other readings declined. Expectations for capital spending also deteriorated as did expected technology spending. The expected prices paid and received figures fell.
The latest survey was conducted between October 2 and October 10. The headline index reflects the answer to only one question concerning general business conditions and is not calculated from the components.
The New York Fed survey data are contained in Haver’s SURVEYS database. The expectations series is in Haver’s AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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