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Economy in Brief

Empire State Manufacturing Index Declines in October
by Tom Moeller  October 17, 2022

• Employment weakens; shipments, delivery times & inventories decline.

• Order backlogs & employee hours improve.

• Prices paid index gains but prices received ease.

The Empire State Manufacturing Index of General Business Conditions declined to -9.1 during October from -1.5 in September. These figures were improved from -31.3 in August, suggesting that the rate of deterioration has moderated. A reading of -1.5 had been expected in the Action Economics Forecast Survey. The latest survey was conducted between October 3 and October 11.

Haver Analytics constructs an ISM-adjusted Empire State diffusion index using methodology similar to the ISM series and information from five component indexes in the survey. Remaining just above the level of 50 which separates expansion from contraction, this index fell to 51.5 this month from 54.5 in September.

The headline index reflects the answer to a single question on general business conditions. The details in the report this month are mixed. The employment index fell to 7.7 from 9.7. An increased 20.5% of respondents reported more hiring while a greatly increased 12.8% reported a decline. The shipments series weakened to -0.3 from 19.6 as a lessened 27.5% of respondents reported higher shipments and an increased 27.8% reported a decline. The delivery times index weakened to -0.9 and reversed it September gain. The inventories reading fell to 4.6 from 9.4. It was the lowest figure since June 2021.

Moving higher, the unfilled orders measure rose to -3.7, its highest reading since May. The average workweek reading improved to 3.3 from -0.1 in September as 12.6% of respondents worked longer hours while 9.3% reported fewer. The new orders measure held steady at 3.7, up from -29.6 in August. A greatly increased 29.7% of respondents reported more orders while a lessened 26% reported a decline.

On the pricing front there was upward pressure m/m. The prices paid index rose to 48.6 this month from 39.6 in September. It remained below the level of 86.4 six months earlier. The percentage reporting paying higher input prices rose to 55.0%. The percentage paying lower prices increased slightly to 6.4%. The prices received index eased to 22.9 last month from 23.6. It as the lowest reading since January 2021.

Looking ahead six months, the respondents' optimism index deteriorated to -1.8 from +8.2 in September. Inflation expectations rose slightly but the employment figure fell to its lowest point since February 2021. Expectations for new orders also fell sharply.

The Empire State data, reported by the Federal Reserve Bank of New York, reflect business conditions in the manufacturing sector in New York State. 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 the percent 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.

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