The Manufacturing Index Reverses, Falls

The New York Federal Reserve Bank’s latest survey indicates a slowing of the regional economy. This was not expected by economists.

The November 2013 Empire State Manufacturing Survey indicates that manufacturing conditions weakened somewhat for New York manufacturers. The general business conditions index fell four points to -2.2, its first negative reading since May. The new orders index also entered negative territory, falling thirteen points to -5.5, and the shipments index moved below zero with a fourteen-point drop to -0.5. The prices paid index fell five points to 17.1, indicating a slowing of input price increases. The prices received index fell to -4.0; the negative reading was a sign that selling prices had declined—their first retreat in two years. Labor market conditions were also weak, with the index for number of employees falling four points to 0.0, while the average workweek index dropped to -5.3. Despite the negative readings registered by many of the indexes for current activity, indexes for the six-month outlook continued to convey a strong degree of optimism about future business conditions. . . .

Manufacturing conditions weakened somewhat, according to the November survey. After slowly drifting down since July, the general business conditions index fell below zero for the first time since May, slipping four points to -2.2. This month, 23 percent of respondents reported that conditions had improved while 25 percent reported that conditions had worsened. The new orders index also moved below zero, falling thirteen points to -5.5. The shipments index fell fourteen points to -0.5, and the unfilled orders index declined eleven points to -17.1. The delivery time index rose seven points to -4.0, and the inventories index was little changed at -1.3.

Labor market conditions were subdued. The index for number of employees drifted downward for a third consecutive month, coming in at 0.0 in November in a sign that employment levels were flat. The average workweek index fell nine points to -5.3, pointing to a decline in hours worked. Price indexes were also lower. The prices paid index fell five points to 17.1, indicating that the pace of input price increases slowed. The prices received index fell six points to -4.0, signifying that selling prices dropped; the price decline was the first in two years.

This is a major reversal. It took place across the boards.

This could be a temporary fluke. But this is November. This is the month preceding the Christmas season. This should be a time of increasing demand. It isn’t in the New York City area — the heart of America’s financial center.

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