New York Manufacturing Plunges to Pandemic-Low Levels in January

Key Points

• Business activity in New York State sharply declines to -43.7, lowest since May 2020.
• New orders, shipments drop significantly; unfilled orders decrease; employment, workweek slightly decline.
• Input prices rise, selling prices stable.

Activity Declines to Lowest Level Since Pandemic

Business activity in New York State took a sharp downturn, as reported by manufacturers participating in the January 2024 Empire State Manufacturing Survey. The headline general business conditions index plummeted by twenty-nine points to -43.7, marking its lowest reading since May 2020.

This decline was mirrored in new orders and shipments, both of which posted significant drops. Unfilled orders continued their notable decrease, and delivery times shortened. Inventories saw a slight reduction, and employment, along with the average workweek, experienced modest declines.

Input prices accelerated somewhat in their pace of increase, while selling prices remained relatively stable. Despite expectations of improved conditions over the next six months, optimism within the manufacturing sector remained subdued.

Headline Index Dips Sharply

Manufacturing activity in New York State contracted significantly in January, with the general business conditions index plummeting by twenty-nine points to -43.7, marking its lowest level since May 2020. This steep decline was mirrored in the new orders index, which fell by thirty-eight points to -49.4, and the shipments index, which dropped by twenty-five points to -31.3.

These numbers point to a substantial reduction in both orders and shipments. The unfilled orders index held steady at -24.2, indicating a continued significant decrease in unfilled orders. Meanwhile, the inventories index registered at -7.4, suggesting a modest reduction in inventories, and the delivery times index remained in negative territory at -8.4, indicating shorter delivery times.

Employment and Work Hours Contract

The index for the number of employees remained relatively unchanged at -6.9, and the average workweek index was recorded at -6.1, indicating a slight decrease in employment levels and hours worked.

On the pricing front, the prices paid index increased by seven points to 23.2, signaling a modest uptick in input price increases. In contrast, the prices received index remained stable at 9.5, indicating that selling price increases remained moderate.

Cautious Optimism Prevails

While there is an expectation of improved activity in the coming months, optimism in the manufacturing sector remained cautious. The index for future business conditions climbed by seven points to 18.8.

Additionally, the capital spending index increased by ten points to 13.7, indicating some improvement in investment plans.