U.S. Empire State Manufacturing Index Turns Negative in December
by:Tom Moeller
|in:Economy in Brief
Summary
- Weakness is broad-basted amongst categories.
- Inflation pressures ease.
- Six-month outlook improves.
General Business Conditions index declined to -14.5 in December from +9.1 in November. The figure was been negative for two of the last three months. During all of 2023, the index averaged -8.6 compared to -2.9 in 2022. The figures are produced by the Federal Reserve Bank of New York. For December, a reading of 2.8 had been expected in the Action Economics Forecast Survey. The percentage of respondents reporting an increase in business conditions fell to 17.9% from 33.2% in November while the percentage reporting a decrease rose to 32.4% from 24.1%.
Haver Analytics constructs an ISM-adjusted series, which is comparable to the ISM manufacturing index. The index fell to 45.3 in December from 50.4. It remained below the high of 63.4 in July 2021. A level of 50 is the breakeven point between expansion and contraction.
The new orders index fell to -11.3 this month from -4.9 in November. A lessened 20.7% of respondents reported higher orders while an increased 32.0% reported a decline. The shipments index declined to -6.4 after rising to 10.0 in November and remained below a high of 23.9 in April. The unfilled orders index eased to -24.0 in December from -23.2 in November. It was the lowest reading since December 2013, negative for the eighth consecutive month. The delivery times reading fell to -15.6 this month from -6.1. The inventories index fell to -5.2 from +9.1, reversing November’s inventory accumulation.
The employment index declined to -8.4 in December from -4.5 in November, and remained well below its high of 14.0 in December of last year. A lessened 7.9% of respondents reported increases in employment while an increased 16.3% reported lower employment. The average workweek reading of -2.4 this month compared to -3.8 in November.
Inflation pressures were muted in December. The prices paid index fell to 16.7 from 22.2. The index is down from 50.5 one year earlier and well below its April 2022 high of 86.4. A lessened twenty-six percent of respondents reported higher prices while a higher 9.4% reported a decline. The prices received index of 11.5 compared to 11.1 in November. Its low was 3.9 in July. The index remained down from 28.4 in February. A lessened 15.6% of respondents reported higher prices received in December while a lessened 4.2% reported lower prices received.
Expectations for business conditions in the next six months improved during December. The index for future business conditions rose to 12.1 in December from -0.9 in November. It was increased from a July 2022 low of -6.2, indicating firms were more optimistic about future business. The employment & hours worked indexes eased but most other readings, including new orders & shipments, increased. Expectations for capital spending also improved as did expected technology spending. The indexes of expected prices paid and received both fell.
The latest survey was conducted between December 4 and December 11. 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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