U.S. Empire State Manufacturing Survey More Positive in November

The General Business Conditions index of the New York Fed’s Empire State Manufacturing Survey shifted notably positive in its November data, reaching 9.1 from -4.6 in October. The Action Economics Forecast Survey had looked for a much smaller shift to a still-negative -2.8 in its November reading. The share of Empire State Survey respondents reporting an increase in overall business this month rose to 33.2% from 24.1% in October, while the share with a decrease in business decreased to 24.1% from 28.7% in October. This survey was conducted between November 2 and November 9.

Haver Analytics constructs an ISM-adjusted series that is comparable to the ISM manufacturing index; for the New York Fed survey, this rose to 50.4 this month from 49.2 last month, but is marginally lower than 51.1 in September. The 50-level is the breakeven point between expansion and contraction; in the last six month, this index has hovered between 45.9 (August) and 51.5 (June).

In November, respondents reported that new orders increased at 24.5% of firms and decreased at 29.4%, for a balance of -4.9%. In October orders had increased at 27.1% of firms and decreased at 31.3%, producing a balance of -4.2%. For the first 11 months of 2023, orders increased at an average of 26.9% of firms and decreased at 34.2% of firms, with the resulting balance of -7.4% indicating a protracted reduction in new orders last seen during the 2020 pandemic recession.

Shipments, in contrast, rose markedly in the November survey results, when they were up 10.0%, following just 1.4% in October. With the slowing of new orders, the increase in shipments produced a decline of unfilled orders of 23.2%, more than the decline of 19.1% in October. Delivery times were little changed, falling 6.1% in November after a 6.4% decline in October. Inventories did grow in the November survey, at a net of 9.1% of firms after a decreasing at a net of 2.1% in October.

Evidently, the decline in new orders suggested to companies that they might want a smaller workforce, and employment was down 4.5% in November after an increase of 3.1% in October. However, respondents do expect employment to increase over the next six months by 16.5%, although this is moderately less than the 21.0% increase expected in last month’s survey. The workweek measure decreased 3.8 percentage points in November after rising a modest 2.2 in October, while respondent do expect it to pick up by 12.1 in the next six months, stronger than October’s expectation of 5.3.

Inflation is still pressuring businesses, although this eased somewhat this month. Prices paid by businesses rose at 30.3% of firms, down from 33.0% in October and much lower than the 67.7% reading for all of 2022. Prices decreased for 8.1% of firms this month, marginally more than the 7.4% last month. While obviously still low, this is more than the 2022 average of just 3.1%. Expectations edged upward in this month’s survey, with the balance of increase-minus-decrease rising to 32.3% from 28.7% in October. As with other price measures here, this is less than during 2022, when the balance was 59.8.

In assessing these survey results, do note that the “general business conditions” measure reflects the answers to just one survey question about general business conditions and is not an average of responses to other questions that might be seen as components. These New York Fed survey data are in Haver’s SURVEYS database. The forecast item mentioned in the first paragraph is from the Action Economics Forecast Survey and is in the AS1REPNA database.