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Monday, August 15, 2022
HomeNewsEconomyNew York Manufacturing Contracts For First Time In Nearly Two Years

New York Manufacturing Contracts For First Time In Nearly Two Years

empire state manufacturing index

Readings from the Empire State manufacturing index reported by the New York Fed monthly.

New York manufacturing business activity shrank for the first time in nearly two years, according to the New York Fed’s Empire State Manufacturing Survey released Monday.

The New York Federal Reserve’s Empire State’s index of business conditions plummeted to -3.58 in December from 10.16 in November. A reading above zero indicates expansion, while negative readings suggest contraction. Economists surveyed by The Wall Street Journal had expected the latest index to rise to 14, not contract as it did.

“Overall, readings for the headline index during the fourth quarter of 2014 mark a significant downshift in activity from the levels seen during the five-month period from May through September,” the report said.

ny-fed-manufacturing-chart

The December 2014 Empire State Manufacturing Survey indicates that business activity declined for New York manufacturers. (Source: NY Fed)

The Empire subindexes showed broad-based declines in December.

The new-orders index tanked to -1.97 this month from 9.14 in November, while the shipments index also bottomed-out in the negatives to -0.22, down from 11.83. Meanwhile, inventories contracted badly, plummeting to -11.46 from zero last month.

Labor indicators for the region were across-the-board negative, as the index for the number of employees fell to 8.33 in December, down from 8.51. The average workweek fell to -11.46 from -7.45, but the prices paid index was little changed at 10.4, indicating a continued modest increase in input prices, while the prices received index climbed to 6.3 from the flat reading in November.

The generally downbeat view on current conditions were paired with a softening of outlooks on business activity.

The general business-conditions expectations index for the next six months slipped to 38.58 this month after rising to 47.61 last month, though the New York Fed said the reading remains “fairly high” by historical standards.

The new-orders expectations index fell to 38.42 from, down from 46.99, while shipment expectations fell to 37.92, down from 44.68. The employee-expectations index also fell to 20.83, down from 24.47. However, the average employee workweek-expectations index actually showed a modest improvement at 12.5, up from 8.51 measured in November.

Spending expectations pulled back as well, with the capital expenditure-outlook index falling to 15.63 from 27.66.

The New York Fed survey is the first factory report released by regional Fed banks, and serves as a bellwether to forecast the health of the industrial sector nationwide due to its influence on the monthly manufacturing report conducted by the Institute for Supply Management.

Written by
Staff Writing Group

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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