Haver Analytics
Haver Analytics
| Jan 16 2024

U.S. Empire State Manufacturing Index Collapses in January

  • Reading falls 29 points to lowest level since May 2020.
  • Component declines are widespread, though employment & price readings move higher.
  • Six-month outlook improves again.

General Business Conditions index declined to -43.7 in January from -14.5 in December. The weakening followed a 24 point December shortfall from +9.1 in November. The figures are produced by the Federal Reserve Bank of New York. For January, a reading of -4.0 had been expected in the Action Economics Forecast Survey. The percentage of respondents reporting an increase in business conditions fell to 10.4% from 17.9% in December and 33.2% in November while the percentage reporting a decrease rose to 54.2% from 32.4% last month and 24.1% in November.

Haver Analytics constructs an ISM-adjusted series, which is comparable to the ISM manufacturing index. The index fell to 39.7 in January from 45.3 in December and 50.4 in November. The index stands at its lowest point since April 2020 and remains below the high of 63.4 in July 2021. A level of 50 is the breakeven point between expansion and contraction.

The new orders index collapsed to -49.4 this month from -11.3 in December. A lessened 12.2% of respondents reported higher orders while an increased 61.5% reported a decline. The shipments index declined to -31.3 after falling to -6.4 in December and remained below a high of 23.9 in April of last year. The inventories index weakened to -7.4 from -5.2 in December. The unfilled orders index eased to -24.2 in January from -24.0 in December. It roughly equaled the lowest reading since December 2013 and was negative for the ninth consecutive month. The inventories reading declined to -7.4 from -5.2 last month, after having increased to 9.1 in November. The average workweek reading of -6.1 this month compared to -2.4 in December.

Working higher, the employment index rose to -6.9 in January from -8.4 in December, but remained well below its recent high of 14.0 in December of 2022. A fairly steady 7.5% of respondents reported increases in employment while a lessened 14.4% reported lower employment. Also rising, the delivery times reading improved to -8.4 this month from -15.6 in December, but remained well below the October 2021 high of 38.0 as delivery times shortened.

Inflation pressures picked up slightly in January. The prices paid index rose to 23.2 from 16.7 but the index remained down from 33.0 one year earlier. It was well below its April 2022 high of 86.4. A lessened twenty-five percent of respondents reported higher prices while a lessened 2.1% reported a decline. The prices received index fell, however, to 9.5 from of 11.5 in December. Its low was 3.9 in July. The index remained down from 28.4 last February. A lessened 11.6% of respondents reported higher prices received this month while a lessened 2.1% reported lower prices.

Indicating that firms are more optimistic about the future, expectations for business conditions in the next six months improved during January after moving higher in December as well. The index for future business conditions rose to 18.8 in January from 12.1 in December. It is up from a July 2022 low of -6.2. The delivery times and unfilled orders series surged. The employment & hours worked indexes strengthened along with most other readings, including new orders & shipments. Expectations for capital spending also improved as did expected technology spending. The indexes of expected prices paid and received both increased.

The latest survey was conducted between January 3 and January 10. The headline index reflects the answer to only one question concerning general business conditions and is not calculated from the components.

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

  • Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio.   Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984.   He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C.   In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists.   Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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