New York Manufacturing Surges to Highest Level in a Year

Factory activity surged across New York State in November, with a key Federal Reserve survey showing unexpected strength as business conditions hit their best level since last November and manufacturers expressed confidence about the months ahead.

The Empire State Manufacturing Survey’s headline general business conditions index surged to 18.7 from 10.7 in October, a substantial eight-point jump that marked the fourth consecutive positive reading and the strongest level in a year.
The gains were broad-based. The new orders index climbed sharply, up 12.2 points to 15.9, while the shipments index increased 2.4 points to 16.8, pointing to robust demand. After three months of negative readings, the inventories index rose 8 points to 6.7, a sign that manufacturers are confident enough to build stocks.

Supply conditions continued to tighten modestly. The delivery times index edged up to 7.7, while the supply availability index ticked down to minus 11.5, continuing a trend of somewhat longer delivery times and worsening supply availability.

Employment indicators also strengthened noticeably. The index for the number of employees ticked up to 6.6, while the average workweek index jumped to 7.7, a multi-year high, pointing to both more hiring and expanded hours.

Price pressures showed signs of easing. The prices paid index dropped 3 points to 49.0, while the prices received index dipped 3 points to 24.0. Both indexes remained elevated, however, with a substantial majority of firms reporting higher input and selling prices.

Manufacturers remained optimistic about coming months. The index for future general business conditions stood at 19.1, down from October’s 30.3 but still solidly positive. Firms expect new orders and shipments to increase further, and anticipate supply availability to remain little changed. Despite some moderation from October’s peak, the reading suggests manufacturers expect the current momentum to continue.

Capital spending plans accelerated sharply, with the capital expenditures index jumping 14 points to 11.5, a sign of business confidence.