Manufacturing activity contracted for a third consecutive month in New York State, according to the Empire State Manufacturing May survey. The diffusion index for General Business Conditions fell 1.1 points to -9.2. The latest reading was worse than the forecast of -8.2.
Here are details from the report.
BUSINESS CONDITIONS CONTINUE TO WORSEN
Manufacturing activity fell for a third consecutive month in New York State, according to the May survey. The general business conditions index was similar to last month’s reading at -9.2. The new orders index climbed above zero and, at 7.0, pointed to a modest increase in orders. The shipments index also turned positive, but only just so, and at 3.5, indicated a slight increase in shipments. Unfilled orders edged up. The inventories index remained positive at 4.8, signaling that business inventories continued to move higher. Delivery times were steady, while the supply availability index fell to -11.4, suggesting supply availability worsened.
INPUT PRICE INCREASES CONTINUE TO PICK UP
The index for number of employees came in at -5.1, and the average workweek index was -3.4, pointing to a small decline in both employment and hours worked. The prices paid index climbed for a fifth consecutive month, rising eight points to 59.0, its highest level in more than two years. The prices received index retreated six points to 22.9, suggesting that selling price increases slowed somewhat.
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 -12.4, its lowest level in a year.
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.
