Empire State Manufacturing Surprises in November

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.

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By David Schollaert, David@SteelMarketUpdate.com