NY Manufacturing Index Tumbles to -20.9, a 19-Point Drop in March 2024

Manufacturing Downtrend in New York State

March 2024 has seen a continued decline in manufacturing activity in New York State, as revealed by the latest Empire State Manufacturing Survey. This downtrend is marked by a significant drop in the general business conditions index, falling nineteen points to a low of -20.9.

Demand and Shipments Wane

There’s a notable softening in demand, with the new orders index dropping eleven points to -17.2. Concurrently, shipments have decreased, evidenced by a ten-point fall in the shipments index to -6.9. This decline in both new orders and shipments underscores a weakening demand environment.

Inventory and Order Backlogs Decline

The survey indicates a continued shrinkage in unfilled orders, as the unfilled orders index steadies at -10.9. Additionally, inventories are diminishing, with the inventories index marginally changing to -12.9. Delivery times appear stable, with the delivery times index at -1.0.

Employment and Working Hours Decrease

Labor market indicators are showing signs of stress. Both employment levels and working hours are on a downtrend, as reflected in the seven-point decrease in the employment index to -7.1 and a six-point fall in the average workweek index to -10.4.

Price Pressures and Future Outlook

While input price increases have moderated slightly, selling price increases have remained consistent. Firms maintain a cautious optimism for the future, with the future business conditions index stable at 21.6. However, this subdued optimism aligns with modest capital spending plans.

Short-Term Market Forecast

Given the current conditions, the short-term outlook for the manufacturing sector in New York State leans bearish. The significant declines in demand and shipments, coupled with weakening labor market indicators and continued inventory reductions, paint a challenging picture for the sector in the near future. The steady selling price pressures add another layer of complexity, suggesting potential margin squeezes for manufacturers.