Empire State Survey Improves in June, Manufacturers Optimistic

Written by Sandy Williams

New York manufacturing conditions stabilized in June after two months of record decline. The Empire State Manufacturing Survey general business index climbed 48.5 points to register -0.2, well outpacing economic forecasts for a reading between -27 and -35. Thirty-six percent of firms surveyed indicated business conditions had improved, compared to 15 percent in May. New orders rose 42 points to -0.6 and shipments gained 42.3 points to register 3.3. Delivery times and inventories were steady during the month.

Employment levels declined slightly during June, but 18 percent of firms reported an increase in employment. Average work week data showed hours worked were still in decline, but at a slower pace.

Input prices increased at a faster pace in June, but prices received remained steady.

Although the index remains in contraction, the improved business conditions are a welcome development for New York manufacturers. The region was one of the hardest hit by the COVID-19 crisis.

New York manufacturers are optimistic that better business days are ahead. The June index for future business conditions rose 27 points to 56.5, the highest level in more than 10 years. Firms are expecting significant increases in new orders and shipments and plan to increase staffing in the next six months.

“New York State was slow to reopen its economy last month, which meant that the Empire State survey was the weakest of all the regionals in ISM-weighted terms in May. With many factories emerging from lockdown in June, the month-to-month change seems likely to be positive even if total output remains far below pre-pandemic levels,” said Lou Crandall, chief economist at Wrightson ICAP, in a comment to MarketWatch.

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