Empire State Manufacturing Survey Stuck in Contraction for Third Straight Month

The New York Federal Reserve’s Empire State Manufacturing Survey for the region remained stuck in contraction territory in October, declining for a third consecutive month. The gauge of manufacturing activity in the region clocked in at -11.36, up from -14.67 in September.

Wall Street had anticipated a rise to -8, though also still an indication of contraction. Readings above 0 point to expansion, while those below indicate contraction.

The general business conditions index inched up by 3 to -11.4, but it marks the third straight month of readings below -10 and the first such occurrence since 2009. While 21% of survey respondents reported that conditions had improved over the month, 33% reported that conditions had worsened. Further, the new orders index continued to decline, dropping 6 points to -18.9, while the shipments index also fell six points to -13.6. The unfilled orders index dropped 7 points to -15.1. Again delivery times clocked in shorter this month, as the delivery time index fell by 5 points to -11.3. The inventories index rose eleven points to -7.6, indicating that inventory levels declined, though at a somewhat slower pace than in September.

The prices paid index remained relatively flat, though fell to 0.9, its lowest level since 2009. The prices received index edged down by 3 points to -8.5, which is indicative of a decline in selling prices. Labor market conditions in the manufacturing sector continue to worsened. The index for number of employees fell for a fourth consecutive month, falling 2 points to -8.5 in a clear and ominous sign that employment levels were even lower. The average workweek index remained negative at -7.6, pointing to shorter workweeks.

The closely-watched report comes ahead of the Philadelphia Federal Reserve’s index of regional mid-Atlantic manufacturing activity, or the Manufacturing Business Outlook Survey. It, too, contracted and tanked last month to -6, down from 8.3 the month prior. The Chicago Business Barometer, the Institute for Supply Management-Chicago’s gauge of Midwest manufacturing activity, fell into contraction at 48.7, down from 54.4 the month prior.