Economy

Empire State Manufacturing Surprises in November

Written by David Schollaert

November 15, 2022

Exceeding expectations, business activity in the state of New York improved in November, moving into positive territory for the first time in four months, according to the Empire State Manufacturing Survey.

The New York Fed’s Empire State headline general business conditions index — a gauge of manufacturing activity in the state — recovered by 13.6 points in November to a reading of 4.5. The reading came in better than the market expectation of -5. (Any reading below zero indicates deteriorating conditions.)

The index, at -9.1 in October, was in negative territory for a third straight month after falling by the second-largest monthly decline on record.

The November recovery was a welcome sight, with one-third of respondents reporting that conditions had improved over the month, the report said. The outlook is still mixed as nearly 29% still said business conditions had deteriorated.

“Labor market indicators pointed to a solid increase in employment and a longer average workweek,” the NY Fed said in its publication. “Input prices increased at about the same pace as last month, while selling price increases picked up.”

But the report cautioned that the surprise boost was likely only temporary, noting that “firms expect business conditions to worsen over the next six months.”

The report provided a few key takeaways: On the one hand, the report said delivery times were little changed, inventories moved higher, shipments also grew, and selling prices picked up. On the other hand, the report pointed to some softening in new orders, while unfulfilled orders also declined.

Employee indexes both grew in November, up for a second consecutive month. The average workweek index rose to 6.9, up from 3.3 points from October’s reading, while employment grew by 4.3 points to a reading of 12.2.

Firms were again not very optimistic that business conditions would improve over the next six months, a sentiment expressed only seven times in the survey’s history but for the fifth straight month, the report said.

The index for future business conditions fell four points on the month in November to -6.1 — the weakest outlook since July, and indicating that firms expect conditions to worsen over the next six months.

Though employment is expected to pick up, the indexes for future new orders, shipments, and capital were depressed. Delivery times are expected to shorten, and only moderate increases in technology spending are planned for the months ahead.

EmpireStateManuf. Nov

An interactive history of the Empire State Manufacturing Index is available on our website. If you need assistance logging into or navigating the website, please contact us at info@SteelMarketUpdate.com.

By David Schollaert, David@SteelMarketUpdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

Read more from David Schollaert

Latest in Economy

CRU: Dollar and bond yields rise, metal prices fall as Trump wins election

Donald Trump has won the US presidential election. The Republican party has re-taken control of the Senate. Votes are still being counted in many tight congressional races. But based on results so far, the Republicans seem likely to maintain control of the House of Representatives. If confirmed, this will give Trump considerable scope to pass legislation pursuing his agenda. What this means for US policy is not immediately obvious. Trump will not be inaugurated until Jan. 20. In the coming weeks and months, he will begin to assemble his cabinet, which may give a clearer signal on his policy priorities and approaches. Based on statements he made during the presidential campaign, we have set out the likely direction of his economic policy here and green policy here.