Business activity in New York state suffered a severe and unexpected crash in August, according to a survey released Monday by the Federal Reserve Bank of New York.
The New York Fed’s Empire State Manufacturing Survey index of general business conditions plunged 42.4 points to minus 31.3.
It was the second-largest monthly decline on record and among the lowest levels in survey history. Only March and April 2020 and February and March 2009 were worse.
Economists expected the index to dip to 5 from 11 in July.
The new orders index fell 35.8 points to minus 29.6, the lowest reading for this gauge outside the March-May 2020 lockdown period. The deliveries index fell 49, 4 points to minus 24.1. This indicates a sharp drop in orders and deliveries.
Unfilled orders fell 12.7 points to minus 7.5, the third consecutive decline. The inventory index fell to 6.4, indicating that delivery times have increased slightly.
Given the drop in demand, it is not surprising that delivery times have remained stable. It was the first time in two years that delivery times had not deteriorated.
The price paid index fell but remained high, indicating a deceleration in the rise in input prices. The price received index held up, indicating that inflationary pressures have not eased on the selling side despite the collapse in demand.
The number of employees index fell 11 points to 7.4, suggesting only a small increase in employment. The workweek index fell, indicating a decline in hours worked.
The Future Trade Conditions Index came in at 2.1, showing that manufacturers are not optimistic about the six-month outlook. Only modest increases in capital spending and technology spending are expected, the New York Fed said. Employment should pick up and delivery times should decrease. The indices for new orders and shipments in six months were positive but at very low levels.
New York Fed survey seen as indicator of US manufacturing conditions On Thursday, the Philadelphia Fed will release its index. Economists’ forecasts released before the surprisingly deep fall of the New York Fed called for the Philadelphia Fed index to improve from minus 12.3 in July to minus 5 in August.