Empire State Manufacturing Index Strengthens in October

The Empire State Manufacturing Index of General Business Conditions index increased to 10.7 during October after declining to -8.7 during September from 11.9 in August, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. The index has been above zero for three of the last four months. The Action Economics Forecast Survey expected a reading of 0.0 for October. The percentage of respondents reporting an increase in general business conditions rebounded to 36.6% in October after falling to 26.6% in September. The percentage reporting a decline fell to 26.0% after rising to 35.4% in September. The latest survey was conducted between October 2 and October 9. The headline reflects the answer to a single question concerning the state of economic activity and is not calculated from the components.

Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index rebounded in October to 52.7 and recovered most of its September decline to 45.7. This index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories, each with equal weights of 20% each.

The increase this month was paced by a surge in the shipments index to 14.4 from -17.3. Forty-two percent of respondents reported an increase in shipments, up from 23.2% in September. The percentage reporting a decline in shipments fell to 27.3% after nearly doubling to 40.5%. The new orders index strengthened to 3.7 after falling to -19.6 in September. Inventories improved to -1.0, the third straight month below zero. The delivery times index improved to 3.9 falling to 0.0 in July from 17.4 in August. Sixteen percent of respondents reported an increase in delivery times and 11.7% reported a decline. The unfilled orders index rose to -3.9, its least negative reading since June, from -6.9 in September.

Employment strengthened to 6.2 from -1.2 in September. It remained below a July high of 9.2. A higher 16.5% of respondents reported an increase in hiring while a steady 10.3% reported decline. The average workweek reading improved to -4.1 this month after falling to -5.1 in September. A slightly higher 7.5% of respondents reported longer hours while a steady 11.7% reported a decline.

Inflation readings strengthened in October. The prices paid index rose to 52.4 after falling to 46.1 in September. An increased 52.4% of respondents reported higher prices while none reported a decline. The prices received index rose to 27.2 after declining to 21.6 in September. Both the prices paid & received indexes remain significantly higher than early last year.

Optimism amongst survey respondents about business during the next six months improved in October. The index for future general business conditions increased to 30.3 after falling to 14.8 in September. New orders & shipments expectations improved sharply. The expected delivery times and inventory readings also rose. The future employment reading recaptured its September decline while the hours worked index surged. The prices paid reading increased to the highest level since May while prices received in six months edged slightly higher. The expected capital spending plans reading inched up this month after falling sharply in September.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s SURVEYS database. The expectations series is in Haver’s AS1REPNA database.

The Fed’s latest Beige Book covering regional economic conditions can be found here.