N.Y. manufacturing index plunges on sharp decline in orders, shipments

A large drop in both orders and shipments were among the factors contributing to a 42-point decline to -31.3 in the general business-conditions index of the August Empire State Manufacturing Survey. 

It represents the second-largest monthly decline in the index on record, the Federal Reserve Bank of New York said. 

The August reading — based on firms responding to the survey — indicates business activity “declined sharply” in New York state, the Federal Reserve Bank of New York said in its Aug. 15 report. A negative index number indicates a decline in the sector, while a positive figure indicates expansion or growth in manufacturing activity. 

 Economists had forecast a reading of 5.0 for the general business-conditions index, according to a poll by The Wall Street Journal.

Survey results indicate that the new-orders index dropped 36 points to -29.6, and the shipments index plummeted nearly 50 points to -24.1, indicating a “sharp decline” in both orders and shipments, the New York Fed said.

The Empire State Manufacturing Survey found 12 percent of respondents reported that conditions had improved over the month, while 44 percent indicated that conditions had worsened.

Additional survey details

Besides the declines in the indexes for new orders and shipments, the unfilled-orders index fell to -12.7, indicating that unfilled orders shrank for a third straight month, the New York Fed said. The delivery-times index declined to around zero, indicating that delivery times held steady — the first month they have not lengthened in nearly two years.

The inventories index fell to 6.4, signaling that inventories increased marginally, the New York Fed said.

The index for number of employees fell 11 points to 7.4, pointing to a small increase in employment, and the average-workweek index fell to -13.1, indicating a decline in hours worked. 

The prices-paid index fell 9 points to 55.5, its lowest level in over a year, indicating a deceleration in input price increases. The prices-received index was little changed at 32.7.

The index for future business conditions came in at 2.1, suggesting that firms were not optimistic about the six-month outlook. The indexes for future new orders and shipments were positive but remained at low levels. 

Employment is expected to pick up, and delivery times are expected to decline over the next six months, the New York Fed said. Only “modest increases” in capital spending and technology spending are planned for the months ahead.

The New York Fed distributes the Empire State Manufacturing Survey on the first day of each month to the same pool of about 200 manufacturing executives in New York state. On average, about 100 executives return responses.