Empire Fed Unexpectedly Drops As New Orders Tumble, Labor Conditions Deteriorate

While recent regional Fed manufacturing indices had shown a pickup in recent weeks, moments ago the Empire Fed, aka the New York State manfucaturing index, disappointed, declining five points from 6 to 0.55, below the 5.0 expected print. The volatile series has now printed below zero, at zero, above zero, below zero, above zero and at zero over the past 6 months.

The breakdown:

  • General business conditions were 6.01 in the last month; Forecast range 0.00 to 10.20 from 46 estimates
  • Prices paid rose to 18.68 vs 18.37
  • New orders fell to -1.82 vs 10.90
  • Number of employees fell to -4.4 vs 0.00
  • Work hours fell to -5.49 vs -5.10
  • Inventory rose to -8.79 vs -15.31
  • Six-month general business conditions fell to 29.24 vs 34.84


According to the NY Fed, the headline general business conditions index fell five points to 0.6. The new orders index and the shipments index both fell to levels not far from zero—a sign that orders and shipments were little changed. Labor market indicators pointed to a small decline in employment levels and hours worked. The prices paid index held steady at 18.7, suggesting that moderate input price increases were continuing, and the prices received index held near zero, indicating that selling prices remained steady. Firms were less optimistic about future conditions compared to last month.

Rejecting the optimistic spike in the Mfg ISM reported last week, the Empire Fed announced that business activity was flat for New York manufacturing firms over the last month. The general business conditions index has been in a seesaw pattern  around zero for the past several months. After rising above zero last month, the index fell back five points to 0.6. Thirty one percent of respondents reported that conditions had improved over the month, while 30 percent reported that conditions had worsened. The new orders index fell thirteen points to -1.8, suggesting that orders were little changed. Similarly, the shipments index fell nine points to 0.7, indicating that shipments were relatively unchanged. The unfilled orders index edged down to -12.1, and the delivery time index moved up to 3.3. The inventories index remained negative at -8.8, indicating that firms continued to draw down inventories in July.

Another confirmation that manufacturing employment continues to deteriorate, contrary to the recent spike reported by the BLS, was the Empire Fed's Labor market conditions which worsened across the board. The employment index dropped four points to -4.4, pointing to a small decline in employment levels, and at -5.5, the average workweek index showed that hours worked moved lower.

Looking for inflationary price pass throughs? Then don't look here: the prices paid index was little changed at 18.7, an indication that input prices continued to increase at a moderate pace. The prices received index edged up to 1.1, suggesting that selling prices held steady.

Finally, the future got a little less bright: indexes for the six-month outlook suggested that respondents remained optimistic about future conditions, though to a lesser extent than in June. The index for future business conditions fell six points to 29.2, and indexes for future new orders and shipments were at similar levels. The index for future employment was near zero, suggesting that firms do not expect any change in employment levels in the months ahead—even so, the index for the expected average workweek fell into negative territory. The capital expenditures index was unchanged at 11.0, and the technology spending index jumped ten points to 14.3.

Overall, a report which shows that contrary to recent expectations that the manufacturing slump is now over, at least in the NY region, things remain shaky and are neither growing nor contrating.


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