Empire State Mfg Survey: Exercise Elevated Modestly In July

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By Jill Mislinski

On July 15, we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 11.2 was an increase of 12.3 from the previous month’s -1.2. The Investing.com forecast was for a reading of -2.0.

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, 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 increased modestly in New York State, according to firms responding to the July 2022 Empire State Manufacturing Survey. The headline general business conditions index climbed twelve points to 11.1. New orders increased marginally, and shipments expanded significantly. Unfilled orders edged lower for a second consecutive month. Delivery times lengthened at the slowest pace in months, and inventories picked up. Labor market indicators pointed to a solid increase in employment and a slightly longer average workweek. While still elevated, both the prices paid and prices received indexes moved significantly lower, pointing to a deceleration in price increases. Firms turned pessimistic about the six-month outlook, a rare occurrence in the survey’s history. [Full report]

Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Empire State Manufacturing Survey

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 picked up in 2016, with a giant dip in 2020 due to COVID-19.

Here is an overlay of the current and future conditions (a six-month outlook).

Empire State Manufacturing Survey

Meanwhile, here’s another look at the latest ISM Manufacturing Business Activity Index.

ISM Manufacturing Business Activity Index

Let’s compare all five regional manufacturing indicators. Here is a three-month moving average overlay of each since 2001 (for those with data).

Regional Manufacturing Three-Month Averages

Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions.

Regional Manufacturing Average

Original post

Editor’s note: The summary bullets for this article were chosen by Seeking Alpha editors.

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