Manufacturing Activity in New York State Plummets, Future Outlook Remains Grim

Highlights

• New York State business activity drops significantly
• General business conditions index plunges to -31.8
• Future outlook shows little improvement in the next six months

Empire State Manufacturing Survey Reveals Prolonged Downturn

Business activity fell sharply in New York State, according to firms responding to the May 2023 Empire State Manufacturing Survey. The headline general business conditions index dropped forty-three points to -31.8. New orders and shipments plunged after rising significantly last month.

Delivery times shortened somewhat, and inventories contracted. Both employment and hours worked edged lower for a fourth consecutive month. Prices increased at about the same pace as last month. Capital spending plans turned sluggish. Looking ahead, businesses continued to expect little improvement in conditions over the next six months.

Significant Decline in NY Manufacturing Activity Recorded

Manufacturing activity declined significantly in New York State, according to the May survey. After jumping into positive territory last month, the general business conditions index plunged forty-three points to -31.8. Seventeen percent of respondents reported that conditions had improved over the month, while forty-nine percent reported that conditions had worsened.

The new orders index sank fifty-three points to -28.0, and the shipments index dropped forty points to -16.4, indicating that both orders and shipments declined after increasing in April. The unfilled orders index fell to -13.2, a sign that unfilled orders were lower. The delivery times index fell to -5.7, suggesting delivery times shortened somewhat. The inventories index fell to -12.3, indicating that inventories moved lower.

Stagnant Employment and Prices Persist in NY

The index for number of employees remained negative for a fourth consecutive month at -3.3, and the average workweek index held below zero at -3.5, pointing to a slight decline in employment and hours worked. The prices paid index was little changed at 34.9, and the prices received index held steady at 23.6, suggesting the pace of price increases was little changed.

Modest Outlook for Future Business Conditions

The index for future business conditions edged up to 9.8, suggesting that firms do not expect activity to improve much over the next six months. New orders and shipments are expected to increase, and employment and the average workweek are expected to edge somewhat higher. The capital spending index fell to 0.9, its lowest level in three years, suggesting that capital spending plans weakened, and the technology spending index fell to 1.9.