Just Released: November Empire State Manufacturing Survey Points to Storm’s Effects
The results of this morning’s November Empire State Manufacturing Survey point to a slight decline in business conditions in New York’s manufacturing sector in the wake of “superstorm” Sandy. The headline general business conditions index was little changed from last month and, at a level of -5.2, suggests that overall, business activity was modestly lower than in our previous survey. Employment levels were noticeably down, as the employment index fell 14 points to -14.6, its lowest level since mid 2009. On the upside, however, the new orders index climbed into positive territory and the shipments index shot up 21 points to 14.6, its highest level since May.
The headline index might have been expected to look worse. The November survey was in the field after the storm—from November 5 to November 13—and many of the respondents were affected. In fact, supplemental questions in the report asked firms whether their businesses were disrupted by the storm. Impacts were widespread and substantial for downstate respondents, while the effects on upstate firms tended to be less prevalent. All of the firms from the New York City area were disrupted—in most cases, severely—with 70 percent of downstate businesses stating that losses of power and communications were major factors in reducing business activity. In upstate New York, just 21 percent of firms reported that business activity was interrupted for a day or more, mostly due to disruptions to their supply chains and problems from their customers who were also affected by the storm.
Manufacturers often make up for lost time by increasing output when they resume operations, so disruptions may not have resulted in any loss in business for those able to compensate. However, some affected businesses surely experienced damage and output losses that they will not be able to make up. We expect to have some information about the nature of these losses in December from supplemental questions that will be asked next month.
The Philadelphia Fed’s latest manufacturing survey, which covers southern New Jersey and eastern Pennsylvania, will also be released this morning, so it will be useful to see how the manufacturing base in these areas was affected. They also asked supplemental questions about disruptions to business activity as a result of the storm.
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.
Jason Bram is a senior economist in the Federal Reserve Bank of New York’s Research and Statistics Group.
Richard Deitz is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.