The January index of manufacturing activity in New York State softened considerably. The Index of General Business Conditions fell 13.06 points, the second down month, to 9.13. That was the lowest level since June 2003. Consensus expectations for the Empire State index had been for a more moderate decline to 19.5. The figures are reported by the Federal Reserve Bank of New York.

Since the series' inception in 2001 there has been a 75% correlation between the index level and the three month change in U.S. factory sector industrial production.

The indexes for new orders halved to 10.26, the lowest level since 2003, while the indexes for employment and shipments also fell considerably. The indexes for inventories and delivery times also fell sharply.

Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.

Pricing pressure improved moderately to the highest level since last September. The 7.02 rise in the prices paid index recovered all of the prior month's decline. Since 2001 there has been an 88% correlation between the index of prices paid and the three month change in the core intermediate materials PPI.

The Empire State index of expected business conditions in six months also fell sharply to the lowest level since last May. The index of expected new orders collapsed to the lowest since March 2006.

The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.

For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click here.