Just Released: November Empire State Manufacturing Survey Shows a Decline in Activity

Jason Bram and Richard Deitz

The results of this morning’s November Empire State Manufacturing Survey point to slightly weaker conditions in New York’s manufacturing sector. After five consecutive months of positive readings, the survey’s headline general business conditions index moved below zero, declining four points to -2.2. The index had been slowly drifting down since July, and was only slightly positive in October. The report also pointed to declines in new orders and unfilled orders. One hopeful sign in the report is that the six-month outlook remained quite optimistic.

The November report, coupled with October’s lackluster results, raises the question whether the modest gains we saw in the manufacturing sector at the national level through the third quarter are now beginning to fade. Results from other Federal Reserve manufacturing surveys were mixed in October, with the Philadelphia and Dallas Feds’ reports emerging as particularly strong, and the Kansas City Fed’s report indicating modest growth, while Richmond’s and New York’s were fairly weak. So it will be especially informative to see what the array of regional manufacturing surveys and the national ISM manufacturing report will show for November as they are released over the next few weeks.

The October report also asked respondents how much input and selling prices had changed over the past year, and how those prices were expected to change in the year ahead. On average, manufacturers said that input prices had increased by 3.4 percent overall during the past year, and they predicted that these prices would rise by 4.0 percent next year. Employee benefits costs rose steeply, reportedly increasing 7 percent in the past year; they are expected to surge by more than 9 percent next year. Prices for other budget categories are projected to rise by between 2½ and 4 percent, a rate of increase that slightly exceeds the rate observed over the past year. Manufacturers expect their selling prices to advance by about 2 percent, on average, in the year ahead.

Disclaimer
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 research officer in the Federal Reserve Bank of New York’s Research and Statistics Group.

Richard Deitz is an assistant vice president in the Research and Statistics Group.