Empire State Manufacturing Survey: Activity Grew Modestly in November

Manufacturing activity grew modestly in New York State, according to the Empire State Manufacturing November survey. The diffusion index for General Business Conditions rose 13.7 points from last month to 9.1. This morning's reading was better than the forecast of -2.8 and pushes the index back into expansion territory.

Background on the Empire State Manufacturing Survey

The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, and below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.

Here is the opening paragraph from the report.

Business activity grew modestly in New York State, according to firms responding to the November 2023 Empire State Manufacturing Survey. The headline general business conditions index climbed fourteen points to 9.1. New orders continued to fall slightly, while shipments picked up. Unfilled orders declined significantly, and delivery times shortened. Inventories increased for the first time in several months. Labor market indicators pointed to a small decline in employment and the average workweek. The pace of input price increases moderated just slightly, while selling price increases were little changed. There was a steep drop in the outlook, with firms no longer expecting conditions to improve over the next six months. [Full report]

Below is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator. The current 3-month moving average is 2.1, up 9.4 points from last month. This is the highest level for the 3-month moving average since June 2022.

Empire State Manufacturing

Since this survey only goes back to July of 2001, we only have two complete business cycles with which to evaluate its usefulness as an indicator for the broader economy. Following the great recession, the index has slipped into contraction multiple times, as the general trend slowed. We saw a gradual decline in 2015 that rose back up in 2016, with a giant dip in 2020 due to COVID-19. The index quickly picked up again in 2021 but has been declining since the start of 2022.