Manufacturing activity continued to decline modestly in New York State, according to the July Empire State Manufacturing Survey. The prevalence index for general business conditions fell to -6.6 from -6.0 in June. The latest reading was worse than the forecast of -5.5.
The Empire State Manufacturing Index ranks the relative level of general working conditions in New York State. A level above 0.0 indicates an improvement in conditions, and a lower level indicates a deterioration in conditions. The reading was compiled from a survey of about 200 factories in New York State.
Since this survey only dates back to July 2001, we only have two full trading cycles to assess its usefulness as an indicator of the broader economy. In the aftermath of the Great Recession, the index slipped into deflation several times, with the overall trend slowing. We saw a gradual decline in 2015 and then rise again in 2016, with a significant decline in 2020 due to the coronavirus. The index quickly rebounded again in 2021, fell in 2022, and then gradually rose in 2023. However, the index started 2024 sharply lower.
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Learn about the Empire State New York Manufacturing Activity Index
The Empire State Manufacturing Index is an economic indicator that measures the activity of the manufacturing sector in the state of New York, USA. Released monthly by the Federal Reserve Bank of New York.
The Empire State Manufacturing Index is a leading indicator of manufacturing activity in the New York State area, providing immediate insight into the state of the region’s economy and business. The index is based on a survey of state manufacturer bosses, where they are asked to assess a range of economic and business indicators such as new orders, production, employment, on-time delivery, prices, and confidence about future economic conditions..
A reading above zero indicates an improvement in manufacturing activity, while a reading below zero indicates a decline in activity. Changes in the index can also be used when compared to the previous month to identify growth or contraction trends in the sector..
The index reading is important for economists and analysts to assess the health of New York State’s manufacturing sector and measure business activity. In addition, the index is a key determinant of the U.S. national economy and is used to predict the performance of the U.S. manufacturing sector in general..
Please note that the information mentioned here is based on the knowledge available until September 2021, and there may be updates or changes in the indicator thereafter. This may affect the production levels and general working conditions monitored by the Empire State Manufacturing Index.
The Empire State manufacturing index can be affected by global economic conditions and trends. New York State’s manufacturing activities can be affected by changes in global demand, international trade dynamics, and global economic growth. Factors such as foreign exchange rates, geopolitical events, or shifts in global supply chains can have repercussions on the manufacturing sector and, consequently, on the index.
Factors affecting the volatility of the Empire State manufacturing index
Volatility in the Empire State manufacturing index can be influenced by several factors. Here are some of the key factors that contribute to index changes over time:
Commodity demand: Changes in the demand for manufactured goods can significantly affect the Empire State manufacturing index. When there is an increase in demand for products, manufacturers tend to experience higher production levels, which can lead to a rise in the index. Conversely, a decrease in demand can lead to lower production levels and a lower index.
Business confidence and sentiment: Business confidence and sentiment play a crucial role in the Empire State Manufacturing Index. If manufacturers are optimistic about future economic conditions, they are more likely to invest in production, expand their operations, and hire more workers. Positive sentiment can contribute to higher index readings. Conversely, if manufacturers are unsure or pessimistic about the economic outlook, they may curtail production and employment, leading to lower index readings.
Supply chain disruptions: Supply chain disruptions, such as natural disasters, trade disputes, or transportation disruptions, can have a significant impact on manufacturing activities. Supply chain disruptions can lead to delays in receiving raw materials, high transportation costs, or difficulties in meeting orders, which can affect the production levels and general working conditions monitored by the Empire State Manufacturing Index.
Global Economic Conditions: The Empire State Manufacturing Index can be affected by global economic conditions and trends. New York State’s manufacturing activities can be affected by changes in global demand, international trade dynamics, and global economic growth.
It is important to note that these factors are interrelated and can affect each other. Volatility in the Empire State Manufacturing Index is often a reflection of the complex interactions between these factors, as well as broader economic trends and events.
