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Economy in Brief

U.S. Empire State Manufacturing Activity Slowed in October
by Kathleen Stephansen, CBE  October 15, 2021

• Activity slowed by more than expected in October.

• New orders, shipments and employment dropped from the high readings in September.

• Prices paid continue to rise.

The Empire State Manufacturing Index of General Business Conditions fell 14.5 points in October to 19.8 from 34.3 in September. The index stood at a record 43.0 in July. A reading of 27.8 had been expected in the Action Economics Forecast Survey.

A lessened 39.4% of respondents reported improved business conditions, down from 45.9% last month, while 19.5% reported that conditions had worsened, up from 11.6% in September. Haver Analytics constructs an ISM-adjusted Empire State diffusion index using methodology similar to the ISM series. The latest reading stood at 60.0, down only slightly from 62.9 in September and the record high of 63.4 in July. A reading above 50 signifies positive growth.

Movements amongst the component series were mixed. The new orders measure eased to 24.3 in October, from 33.7 in September, which had been the highest level since May 2004. The shipments reading dropped to 8.9 in October from 26.9 last month. The delivery time index rose to 38.0, following an increase to 36.5 in September, indicating a continued slow pace of product delivery speed. The unfilled orders series fell to 18.5 from a near-record 20.0 in September. Inventories rose slightly in October to 12.0 from 11.3 last month.

The number of employees index fell to 17.1 in October from 20.5 in September. A lessened 23.6% of respondents reported more hiring while a slightly higher 6.5% reported less hiring.

The average workweek reading dropped to 15.3 this month from a near-record 24.3 in September.

The prices paid index rose to 78.7 from 75.7 last month but remained below the record 83.5 in May. Close to 81% of respondents indicated higher prices while only 1.9% paid less. The prices received measure eased to 43.5 from a record high of 47.8 in September.

The index of business conditions in six months rose to 52.0 in October, its highest level since June 2020, and up from 48.4 in September. Expectations for new orders, inventories, average workweek and prices paid rose. Expectations for shipments, the number of employees and prices received fell.

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 Oct Sep Aug Oct'20 2020 2019 2018
General Business Conditions (Diffusion Index, %, SA) 19.8 34.3 18.3 10.5 -5.9 4.8 19.7
General Business Conditions Index (ISM Adjusted, >50=Increasing Activity, SA) 60.0 62.9 56.7 52.5 49.3 51.8 56.4
  New Orders 24.3 33.7 14.8 12.3 -4.3 3.3 16.4
  Shipments 8.9 26.9 4.4 17.8 -0.2 10.5 20.3
  Unfilled Orders 18.5 20.9 15.0 -6.6 -7.7 -6.0 3.5
  Delivery Time 38.0 36.5 28.3 2.0 2.7 -0.1 9.1
  Inventories 12.0 11.3 6.2 -14.6 -3.9 -0.9 5.9
  Number of Employees 17.1 20.5 12.8 7.2 -1.2 5.4 12.3
  Average Employee Workweek 15.3 24.3 8.9 16.1 -6.9 2.3 7.8
  Prices Paid 78.7 75.7 76.1 27.8 21.5 26.3 45.8
  Prices Received 43.5 47.8 46.0 5.3 4.8 10.3 19.3
Expectations 6 Months Ahead 52.0 48.4 46.5 32.8 29.7 23.9 35.2
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