New York Fed Empire Manufacturing Index Hits 20.6 in August, Well Above 11.0 Estimate
Key Takeaways
- •The Empire Manufacturing general business conditions index climbed to 20.6 in August from 15.6 the prior month, well above the 11.0 consensus estimate and the strongest reading in more than four years.
- •Demand remained solid, with new orders at 17.3 and shipments at 11.7, while unfilled orders rose 11 points to 15.5, indicating a growing order backlog.
- •Supply-side pressure intensified as the delivery time index jumped to 20.6, supply availability worsened to -13.4, and inventories declined during the month.
- •Cost pressures built, with the prices paid index rising to 58.6 while the prices received index fell to 22.7.
- •Firms' six-month outlook improved, as expected business conditions rose to 32.1, expected employment roughly doubled to 28.2, and expected capital expenditures reached 16.5.
The New York Federal Reserve's Empire Manufacturing survey showed factory activity in New York State expanding at its fastest pace in more than four years in August. The general business conditions index climbed to 20.6, up from 15.6 the prior month and well above the 11.0 estimate.
Richard Deitz, economic research advisor at the New York Fed, summarized the report: "New York State manufacturing activity increased at its fastest pace in over four years in August. Employment continued to pick up modestly. However, delivery times were substantially longer and supply availability continued to worsen."
Current conditions
| Index | August | Prior month |
|---|---|---|
| New orders | 17.3 | 22.2 |
| Shipments | 11.7 | 24.4 |
| Unfilled orders | 15.5 | 5.0 |
| Delivery time | 20.6 | 13.0 |
| Inventories | -5.2 | 4.0 |
| Supply availability | -13.4 | -10.0 |
| Employment | 9.3 | 11.4 |
| Average employee workweek | 6.9 | 2.8 |
| Prices paid | 58.6 | 52.3 |
| Prices received | 22.7 | 27.6 |
New orders remained strong at 17.3, while shipments came in at 11.7, signaling solid demand and production. Unfilled orders jumped 11 points to 15.5, indicating a growing backlog, and delivery times rose sharply to 20.6, pointing to significant delays. Inventories declined during the month, and supply conditions deteriorated, with the supply availability index falling to -13.4. Employment continued to pick up modestly, with the employment index at 9.3 and the average employee workweek index at 6.9. The report therefore shows stronger activity alongside more strain in the production pipeline, a combination that can matter for firms watching lead times and input costs.
Expectations six months ahead
| Index | August | Prior month |
|---|---|---|
| General business conditions | 32.1 | 27.9 |
| New orders | 37.1 | 33.2 |
| Shipments | 33.7 | 30.6 |
| Prices paid | 57.7 | 53.0 |
| Prices received | 48.7 | 41.9 |
| Employment | 28.2 | 14.4 |
| Average employee workweek | 1.0 | 2.0 |
| Capital expenditures | 16.5 | 15.0 |
| Supply availability | -9.3 | -8.0 |
| Inventories | 7.2 | 10.0 |
| Delivery time | 7.2 | -4.0 |
| Unfilled orders | 19.6 | -3.0 |
The index for expected general business conditions six months out rose to 32.1 from 27.9, with the expected employment index at 28.2 versus 14.4 and the capital expenditures index at 16.5 versus 15.0. The expected unfilled orders index climbed to 19.6 from -3.0, while the expected delivery time index moved to 7.2 from -4.0. That outlook suggests firms were still planning for continued activity later in the year even as they anticipated ongoing pressure on supply and fulfillment.
Bottom line
New York manufacturing showed strong growth and healthy demand in August, but rising backlogs, longer delivery times, and worsening supply availability point to increasing supply-chain pressures. That pressure was reflected in the prices paid index moving higher, although prices received fell.
Source: ForexLive
