An improvement in business activity in New York State was detected for the first time in nearly a year, according to a September 2024 survey by Empire State manufacturers. The main general working conditions index rose significantly by sixteen points to 11.5. New orders have increased, and shipments have risen significantly. While delivery times and availability of supplies remained stable, stocks stabilized. On the other hand, labor market conditions continued to decline slightly, as employment contracted modestly, and the average working week remained flat. The pace of input increases and selling prices has not changed significantly. However, companies showed greater optimism that conditions will improve in the coming months, despite the capital expenditure index falling below zero levels for the first time since 2020.
This positive activity points to a recovery in New York state’s manufacturing sector for the first time since November last year, according to the September survey. The General Working Conditions Index exceeded the increase by sixteen points to 11.5. In addition, the index of new orders rose seventeen points to 9.4, the highest level recorded in several years, indicating a slight increase in applications. The shipments index also rose eighteen points to 17.9, the highest level recorded in nearly a year and a half, citing strong growth in shipments. Incomplete orders were little changed, while the inventory index rose to 0.0, indicating that inventories were stable after declining over the previous two months. The delivery times index was -1.1, indicating stable delivery times, and the supply availability index was -2.1, indicating that supply availability was slightly lower.
These positive indicators highlight a marked improvement in New York State’s manufacturing sector, reflecting a promising recovery after a period of economic challenges.
Analysis of the Empire State Manufacturing Index and the factors affecting it
The Empire State Manufacturing Index, also known as the Empire State Survey, is compiled by the Federal Reserve Bank of New York and provides an overview of manufacturing activity in New York State. It is based on a survey of manufacturers in the region and is used as an indicator of broader economic conditions. Here’s how the index is calculated and the factors that affect it:
Empire State Manufacturing Index Calculation:
- Survey Methodology: The Federal Reserve Bank of New York surveys a group of manufacturers in New York State to collect data on various aspects of their business activities.
- Ingredients: The survey typically includes questions about new orders, shipments, employment, inventories, delivery times, and prices that manufacturers pay and receive.
- Spread index: Responses from the survey are used to calculate the prevalence index. This indicator measures the percentage of respondents who reported an increase minus the percentage that reported a decrease in each indicator. A positive value indicates expansion, while a negative value indicates contraction.
- Aggregate Index Calculation: The Empire State Aggregate Manufacturing Index is derived by aggregating the spread indicators for different components of the survey. A reading above zero indicates growth in manufacturing activity, while a reading below zero indicates contraction.
Factors affecting the Empire State Manufacturing Index:
- New orders: An increase in new orders usually indicates the growing demand for manufactured goods and indicates a positive outlook for the manufacturing sector.
- Production levels: Higher production levels indicate increased manufacturing activity, which may contribute to economic growth and a positive manufacturing indicator.
By analyzing these components and factors, economists, policymakers, and market participants can gain insights into the health of New York’s manufacturing sector and make informed assessments of trends.
Comparison of the Empire State Index and Regional Manufacturing Indices
Regional manufacturing indicators, such as the Empire State Manufacturing Index, provide valuable insights into the health of specific manufacturing sectors within their respective regions. Here’s how the Empire State Manufacturing Index compares to other regional manufacturing indicators:
Empire State Manufacturing Index (New York):
- Geographic Coverage: Particularly focused on manufacturing activity in New York State.
- Frequency: Monthly release by the Federal Reserve Bank of New York.
- Ingredients: Based on a survey of manufacturers in the region, including new orders, shipments, staffing, inventories, delivery times and prices.
- Importance: It is considered an important leading indicator of national manufacturing activity due to the industrial base and large economic activity in New York.
Richmond Federal Manufacturing Index (Richmond):
- Geographic coverage: Represents manufacturing conditions in the Fifth Federal Reserve District, covering Maryland, Virginia, North Carolina, South Carolina, and most of West Virginia.
- Frequency: Monthly release by the Federal Reserve Bank of Richmond.
- Ingredients: Based on a survey of manufacturing companies and includes indicators such as shipments, new orders, labor and energy utilization.
- Important: Provides insights into manufacturing activity in the Mid-Atlantic and Southeast U.S. region.
Compare it now.
- Geographic Reach: Each indicator covers a specific regional area, providing local insights into manufacturing conditions.
- Frequency and release: All indicators are released monthly, allowing regular monitoring of manufacturing activity.
- Ingredients: Although specific components may vary slightly, they generally include indicators related to new orders, production, employment, and prices.
- Explanation: Changes in these indicators could indicate shifts in regional manufacturing activity, which may have implications for broader economic trends and national manufacturing performance.
Analysis of these regional manufacturing indicators along with national manufacturing data and other economic indicators can provide a comprehensive view of manufacturing activity across different regions in the United States, aiding in economic analysis and forecasting.
