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Economy in Brief

U.S. Empire State Manufacturing Activity Weakens in June
by Tom Moeller  June 15, 2021

• Activity index falls for a second month.

• New orders & shipments measures slow sharply.

• Prices paid ease m/m, but remain strong.

The Empire State Manufacturing Index of General Business Conditions fell nearly seven points to 17.4 during June. It was the lowest level in three months, but remained up from the prior nine months. A reading of 22.0 had been expected in the Action Economics Forecast Survey. A slightly higher 38.5% of respondents reported improved business conditions but a greatly increased 21.1% reported that conditions had worsened.

Haver Analytics constructs an ISM-adjusted Empire State diffusion index using methodology similar to the ISM series. The latest reading of 57.0 was the lowest in three months, but the Q2 reading of 59.3 was the strongest of four consecutive quarters, remaining above the positive growth level of 50.

Amongst the components of the Empire State Survey, declines were widespread. The orders series fell to 16.3, the lowest level in three months, after strengthening to 28.9 in May. The shipments measure weakened to 14.2, the lowest level since February. Unfilled orders also fell sharply to 7.9 after strengthening to 21.4 in May. These figures compare to 0.4 averaged during Q1. Inventories fell to -2.6, the first negative reading since January. Working higher was the delivery time index to a record 29.8, indicating much slower delivery speeds. The series dates back to July 2001.

The number of employees index eased to 12.3 from 13.6 in May, continuing to move sideways as it has for six months. A greatly increased 23.5% of respondents reported more hiring while a higher 11.2% reported less. The average workweek reading fell to 15.1 from 18.7. The Q2 reading of 15.5 was nearly double the readings of the prior two quarters.

Prices paid backpedaled to 79.8 from the record 83.5 in May. It continued to indicate sharply stronger prices. Eighty-one percent of respondents cited higher prices while 0.9% paid less, up from zero in the prior two months. The prices received measure also backpedaled, falling to 33.3 from the record 37.1 in May.

The index of business conditions in six months rose to a 12-month high of 47.7 this month from 36.6 in May. Expectations for new orders, shipments and employment increased m/m but price expectations eased.

The Empire State data, reported by the Federal Reserve Bank of New York, reflect business conditions in the manufacturing sector in New York, northern New Jersey and southern Connecticut. The headline measure is constructed from the answer to a single question on business conditions. The Empire State figures are diffusion indexes, which are calculated by subtracting the percent of respondents reporting declines from those reporting gains. The data are available in Haver's SURVEYS database. The ISM-adjusted headline index dates back to 2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.

Empire State Manufacturing Survey Jun May Apr Jun'20 2020 2019 2018
General Business Conditions (Diffusion Index, %, SA) 17.4 24.3 26.3 -0.2 -5.9 4.8 19.7
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 57.0 60.3 60.5 50.0 49.3 51.8 56.4
  New Orders 16.3 28.9 26.9 -0.6 -4.3 3.3 16.4
  Shipments 14.2 29.7 25.0 3.3 -0.2 10.5 20.3
  Unfilled Orders 7.9 21.4 21.2 -12.5 -7.7 -6.0 3.5
  Delivery Time 29.8 23.6 28.1 1.3 2.7 -0.1 9.1
  Inventories -2.6 7.1 11.6 -0.6 -3.9 -0.9 5.9
  Number of Employees 12.3 13.6 13.9 -3.5 -1.2 5.4 12.3
  Average Employee Workweek 15.1 18.7 12.7 -12.0 -6.9 2.3 7.8
  Prices Paid 79.8 83.5 74.7 16.9 21.5 26.3 45.8
  Prices Received 33.3 37.1 34.9 -0.6 4.8 10.3 19.3
Expectations 6 Months Ahead 47.7 36.6 39.8 56.5 29.7 23.9 35.2
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