New York Fed: Manufacturing Activity Pulled Back from a Three-Year High but Remained Strong

Manufacturing activity in the New York Federal Reserve Bank’s district pulled back in November from October’s 3-year high but remained strong. In the latest Empire State Manufacturing Survey, the composite index of general business conditions declined from 30.2 in October, a pace not seen since September 2014, to 19.4 in November. The underlying indicators were somewhat mixed. On the positive side, new orders (up from 18.0 to 20.7) accelerated, which was encouraging. The percentage of respondents saying that sales had increased in the month rose from 32.3 percent in October to 40.7 percent in November, which was more than enough to offset the gain in those suggesting reduced orders, up from 14.3 percent to 20.0 percent. Shipments (down from 27.5 to 18.4) and employment (down from 15.6 to 11.5) continued to expand at decent rates despite some easing, but unfilled orders (down from 2.3 to -4.6) and the average workweek (down from zero to -0.8) both turned slightly negative.

Nonetheless, manufacturers in the New York region remained very upbeat about the next six months. The expectations composite index rose from 44.8 to 49.9, its highest point since January 2012. In addition, most of the key measures about the next six months reflect optimism about improved activity. This included stronger growth for new orders (up from 44.8 to 53.7), shipments (up from 43.4 to 50.8), hiring (up from 17.2 to 20.8), the average workweek (up from 4.7 to 6.9) and capital expenditures (up from 21.9 to 25.4). In fact, 59.4 percent of those completing the survey anticipated higher new orders in the coming months, with one-third predicting increased employment.

Technology spending (down from 16.4 to 10.8) was also seen expanding modestly despite slowing somewhat in this survey, and pricing pressures (up from 41.4 to 48.5) were also expected to strengthen considerably moving into 2018. The prices paid index rose to its highest level since January.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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