U.S. Empire State Manufacturing Index Plunges in March; Lowest Level Since Jan. ’24
Summary
- General Business Conditions Index down 25.7 pts. to -20.0 in March.
- Negative numbers for new orders (-14.9), shipments (-8.5), unfilled orders (-2.0), and employment (-4.1), but positive reading for inventories (13.3), the highest since Nov. ’22.
- Inflation pressures increase, w/ current prices paid up to 44.9, the highest since Feb. ’23.
- Firms are less optimistic about the future business outlook, w/ Future Business Conditions Index down to 12.7, the lowest since Nov. ’23 and future prices paid up to 58.2, the highest since June ’22.
The Empire State Manufacturing Index of General Business Conditions plummeted to -20.0 in March, down from a positive 5.7 in February and -12.6 in January, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of -2.0 had been expected in the Action Economics Forecast Survey. The March weaker-than-expected index indicated that the business activity in New York State contracted for the second time in three months and to the lowest level since January 2024 (-34.0); it was also down from -9.0 in March 2024. The percentage of respondents reporting an increase in general business conditions was 19.0% in March, down from 26.9% in February; the percentage reporting a decrease was 39.1%, up from February’s 21.2%. The latest survey was conducted between March 3 and March 11.
The headline index reflects the answer to a single question concerning the state of economic activity. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index dropped to 48.7 in March after a 3.6-point increase to 53.6 in February, indicating contraction for the first time since October; it was up from a contraction-level 47.8 in March 2024 and a low of 42.5 in January 2024. A level of 50 is the breakeven point between expansion and contraction. The index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).
In the latest survey, the new orders index dropped to -14.9 in March after a 20.0-point rebound to 11.4 in February, indicating new orders contracted for the second month in three and to the lowest level since April 2024; nevertheless, it was an improvement from a low of -35.0 in January 2024. The shipments index decreased to -8.5 in March following a 15.9-point jump to 14.2 in February, but it was up from a low of -22.7 in April 2024. The unfilled orders index fell to -2.0 in March after a 5.8-point rise to 1.1 in February, remaining in a negative territory for the fifth time in six months; the index reached a low of -24.2 in January 2024. The inventories index, however, rose to 13.3 in March from 8.7 in February, suggesting that inventories expanded for the fifth straight month and to the highest level since November 2022. Meanwhile, the delivery times index fell to 1.0 in March from 5.4 in February, with 13.3% of respondents reporting higher delivery times and 12.2% of respondents reporting lower delivery times.
On the labor front, the number of employees index fell to -4.1 in March after a 4.8-point decline to -3.6 in February, showing employment contracted for the fourth time in five months. The index was up from a low of -9.7 in December 2023. A 9.4% of respondents reported an increase in employment in March while a higher 13.5% reported lower employment. The average workweek fell to -2.5 in March after a 13.9-point increase to -1.2 in February, remaining in a negative territory for the fourth consecutive month.
Inflation indicators remained elevated this month. The prices paid index rose to 44.9 in March, the highest level since February 23, after an 11.1-jump to 40.2 in February. The index was up from a low of 16.7 in December 2023 but significantly down from a high of 86.4 in April 2022. An increased 45.9% of respondents reported higher prices paid in March while only 1.0% reported lower prices paid. The prices received index rose to 22.4 in March, the highest level since May 2023, after a 10.3-point rise to 19.6 in February. The index was up from a low of 3.9 in July 2023 but well below a peak of 56.1 in March 2022. An increased 26.5% of respondents reported higher prices received in March while a lessened 4.1% reported lower prices received.
Firms grew less optimistic about the future business outlook in the latest survey. The index for future business conditions fell to 12.7 in March, the third m/m fall in four months and the lowest reading since November 2023, on top of a 14.5-point decline to 22.2 in February, with a lessened 41.6% of respondents expecting business conditions to improve in the next six months. Growth expectations for employment (8.2 vs. 11.2) and new orders (15.5 vs. 17.8) weakened in March vs. February but remained in a positive territory; growth in shipments (23.0 vs. 22.7) strengthened somewhat. Capital spending plans remained soft, with expectations for capital spending falling to a six-month-low 9.2 in March from 10.9 in February. Expected prices paid rose to 58.2 in March, the highest level since June 2022, from 56.5 in February, while expected prices received declined to 38.8 from February’s 42.4.
The headline index reflects the answer to only one question concerning general business conditions and is not calculated from the components. The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.
The New York Fed survey data are contained in Haver’s SURVEYS database. The expectations series is in Haver’s AS1REPNA database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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