Empire State Survey Reveals Deepening Manufacturing Woes

General Business Conditions Deteriorate

The Empire State Manufacturing Survey for December 2023 paints a challenging picture for New York’s manufacturing sector. The general business conditions index dramatically fell to -14.5, a significant twenty-four-point drop, indicating a downturn in the industry. This decline reflects a continuing trend of fluctuation observed over the past year.

Continuous Decline in New Orders and Shipments

Key indicators such as new orders and shipments have experienced a decline for the third consecutive month. The new orders index dipped to -11.3, and the shipments index decreased to -6.4. Additionally, unfilled orders remained significantly low, and inventories have also shown a reduction, suggesting a contraction in manufacturing activities.

Labor Market and Price Trends

The labor market within the sector is witnessing softening, with the employment levels index dropping to -8.4. This indicates a modest decline in employment and a slight decrease in the average workweek. On the pricing front, the pace of input price increases has moderated, while selling price increases have remained steady.

Cautious Optimism in Future Outlook

Despite a steep decline in optimism last month, there is a slight improvement in the future business conditions index, now at 12.1. However, this level of optimism remains subdued with only modest expectations for improvements in new orders, shipments, and employment in the coming six months. Investment plans, as indicated by the capital spending index and technology spending index, are still weak.

Short-Term Forecast: Bearish Sentiment

Considering the current trends in the New York manufacturing sector, the short-term outlook remains bearish. The decline in key indicators such as new orders, shipments, and employment, coupled with subdued future optimism, reflects ongoing challenges and suggests a cautious approach in the near term for the sector.