New York Fed Manufacturing Shows Slower Growth in November

When the Federal Reserve Bank of New York released its Empire State Manufacturing Index report for November on Monday, the headline index reading came in at a disappointing 6.3. This may weigh on other regional manufacturing data due in the coming days. Monday’s report also leans toward an overall slowing of the economic recovery.

The reading is still positive, above 0.0, but Econoday’s consensus estimate was 13.5 and the Wall Street Journal had its consensus at 12.1. November’s reading also represents a drop from 10.5 in October and was lower than all official estimates that make up the consensus.

Monday’s regional Fed report showed that 31% of respondents reported that conditions had improved in November, and just 24% reported that business conditions had worsened.

According to this report, the slight gain in business activity came with a small gain in new orders, while shipments were listed as modestly higher. The report also noted that business inventories moved lower as delivery times were steady.

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The Federal Reserve’s dual mandate keeps a higher focus on full employment and steady price gains. These two key mandates are still short of ideal because of the pandemic, but the New York region did see gains in employment levels and hours worked. The report also showed that input prices rose at roughly the same pace as in October. Selling price increases also picked up.

The index for the number of employees rose by two points to 9.4, which marked the highest level in nearly a year and shows a modest increase in employment levels. The average workweek index fell by 11 points to 4.8, but this so-called positive value still signals a small increase in hours worked, even if it is less of a gain than in October.

While the prices paid index was little changed at 29.1, the prices received index rose by six points to 11.3 as a representation of higher selling price increases.

Looking ahead for expectations, most firms were considered optimistic that business conditions would improve over the coming six-month period. Unfilled orders and inventories continued to decline.

The new orders index saw a nine-point drop to 3.7, and the shipments index fell by 12 points to 6.3 in November.

The index for future business conditions was steady at 33.9 in November. Employers still expect that both the employment levels and average workweeks will continue to increase in the coming months.

The capital expenditures and technology spending indexes both rose to 17.9, which the New York Fed said is suggesting ongoing planned gains in spending on capital equipment and technology.

The Federal Reserve Bank of New York sends its survey out to a pool of 200 manufacturing executives on the first day of each month. Approximately 100 responses are received, and the current survey responses were collected between November 2 and November 9.

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