Manufacturing activity dropped significantly in New York State, according to the Empire State Manufacturing March survey. The diffusion index for General Business Conditions fell 25.7 points to -20.0, the lowest level since January 2024. The latest reading was worse than the forecast of -1.9.
Here are details from the report.
CONDITIONS DETERIORATE
Manufacturing activity contracted in New York State, according to the March survey. The general business conditions index dropped twenty-six points to -20.0. The new orders index fell twenty-six points to -14.9, and the shipments index fell twenty-three points to -8.5, indicating that both orders and shipments declined after increasing last month. Unfilled orders held steady. The inventories index moved up five points to 13.3, its highest reading in more than two years, signaling that business inventories continued to expand. The delivery times index came in at 1.0, and the supply availability index was -1.0, suggesting delivery times and supply availability were little changed.
PRICE INCREASES PICK UP AGAIN
The index for number of employees held steady at -4.1, and the average workweek index was -2.5, pointing to a slight decline in both employment and hours worked. Both price indexes climbed for a third consecutive month. The prices paid index rose five points to 44.9, its highest level in more than two years, and the prices received index rose three points to 22.4, its highest reading since May 2023.
Background on the Empire State Manufacturing Survey
The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, and below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.
Below is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator. The current 3-month moving average stands at -9.0, the lowest level in eight months.
Since this survey only goes back to July of 2001, we only have two complete business cycles with which to evaluate its usefulness as an indicator for the broader economy. Following the great recession, the index has slipped into contraction multiple times, as the general trend slowed. We saw a gradual decline in 2015 that rose back up in 2016, with a giant dip in 2020 due to COVID-19. The index quickly picked up again in 2021, declined for 2022, and gradually rose in 2023. The index kicked off 2024 with a sharp decline but rose during the back half of the year, reaching positive territory for the first time in over 2.5 years. However, the first few months of 2025 have pulled the index back into negative territory.
