Manufacturing Activity Declines in New York State

Empire State Manufacturing Survey: June 2024 Summary

The Empire State Manufacturing Survey, conducted by the Federal Reserve Bank of New York, revealed a modest decline in business activity for June 2024. Despite some improvement in specific indices, the overall manufacturing sector in New York State continues to face challenges. Here are the key takeaways from the report.

Business Activity and Orders

The general business conditions index rose ten points but remained in negative territory at -6.0, indicating ongoing contraction. New orders saw a significant improvement, with the index climbing sixteen points to -1.0, suggesting orders were relatively flat. Shipments experienced a slight increase, as indicated by the shipments index rising to 3.3. Inventories remained steady, reflected by an index reading of 1.0.

Delivery Times and Supply Availability

Delivery times shortened somewhat, as indicated by the delivery times index at -4.1. The newly introduced supply availability index recorded a -1.0, showing little change in the availability of supplies.

Labor Market Conditions

The labor market continued to struggle, with the number of employees index at -8.7, showing a further decline in employment levels. The average workweek index dropped to -9.9, indicating a reduction in hours worked. These figures highlight ongoing weakness in the labor market within the manufacturing sector.

Price Movements

The pace of price increases for both inputs and outputs moderated for the second consecutive month. The prices paid index decreased by four points to 24.5, and the prices received index fell by seven points to 7.1, its lowest level in a year. This moderation suggests a cooling off in the inflationary pressures within the manufacturing sector.

Optimism for the Future

Despite the current weak activity, there was a notable increase in optimism regarding the six-month outlook. The index for future business conditions surged sixteen points to 30.1, with nearly half of the respondents expecting better conditions ahead. However, the outlook for employment growth remained pessimistic, and capital spending plans continued to appear sluggish.

Market Forecast

The June 2024 Empire State Manufacturing Survey presents a mixed outlook. The modest decline in business activity and ongoing labor market weaknesses point to continued challenges in the near term. However, the significant rise in future business optimism suggests a potential turnaround in the latter half of the year. For traders, the current data indicates a cautious approach is warranted, given the bearish undertones of the present conditions. Nonetheless, the increasing optimism could signal a bullish shift in market sentiment if upcoming data supports this positive outlook.