U.S. Empire State Manufacturing Index Remains in Negative Territory in August
by:Sandy Batten
|in:Economy in Brief
Summary
- Index increase slightly to -4.7 but remained in negative territory for ninth consecutive month.
- Haver calculated ISM-type index also remained in contraction territory.
- New orders still negative while shipments were positive for third straight month.
- Employment indicators still weak.
The General Business Conditions Index from the Federal Reserve Bank of New York rose slightly to -4.7 in August from -6.6 in July. This was the ninth consecutive month that the index has been in contraction territory. However, the August outcome was better than the -8.0 expected by the Action Economics Forecast Survey. The percentage of respondents reporting an improvement in business conditions rose to 28.5% from 24.8% in July while the percentage reporting a decline in activity edged up to 33.2% from 31.4% last month. The survey responses were collected between August 2 and August 9.
The headline index reflects the answer to a single question concerning the state of economic activity. Haver Analytics calculates a composite index, which is comparable to the ISM manufacturing index. That index fell to 47.2 in August from 48.0 in July. A level of 50 is the breakeven point between expansion and contraction.
New orders continue to fall and at a faster pace than in July with the orders index falling to -7.9 from -0.6 in July. This is the eleventh consecutive month that this index has been in negative (contraction) territory. The shipments index remained positive, though barely, for the third consecutive month. It was 0.3 in August, down from 3.9 in July. Delivery times continued to shorten, and supply availability was little changed. Inventories moved lower for a second consecutive month.
Labor market conditions remained weak in August. The employment index was -6.7 in August, its tenth consecutive month below zero, versus -7.9 in July. A higher 10.2% of respondents reported increases in employment while a smaller 16.9% reported lower employment. The hours-worked index plunged to -17.8 in August, its lowest reading since March 2023, from -0.1 in July.
Inflation pressures were mixed this month. The prices paid index slipped to 23.4 in August from 26.5 in July. Thirty-one percent of respondents reported paying higher input prices, about the same as in July, while 7.4% reported paying lower input prices (up from 5.1% in July). By contrast, the prices received index rose to 8.5 in August, its highest reading since May, from 6.1 in July. Fourteen percent of respondents reported an increase in prices, up from 13.3% in July, while 5.3% reported a decrease in prices, down from 7.1% in July.
Firms remained fairly optimistic about the outlook. The index for future business conditions came in at 22.9 versus 25.8 in July, with 45% of respondents expecting conditions to improve over the next six months, up from 40.8% in July. The outlook for employment growth picked up, and capital spending plans, while sluggish, firmed somewhat compared to last month.
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.
The New York Fed survey data are contained in Haver’s SURVEYS database. The expectations series is in Haver’s AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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