Until the past few months I've not routinely reported on monthly manufacturing data, regional or otherwise. However, now that I'm tracking the Big Four economic indicators, which includes Industrial Production, I'm watching these indexes more closely. This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions surprised to the downside.
There are a variety of components to the diffusion index for those who wish to dig deeper. But at the top level, here is a snapshot of New York State's General Business Conditions. The contractionary reading of -7.8 was substantially below the Briefing.com consensus of 2.0. Today's number was a decline from last month's -7.3, which was an upward revision from -8.1.
Here is a chart illustrating both the General Business Conditions and Future General Business Conditions (the outlook six months ahead):
Here is the opening paragraph from the report. The one positive note was the modest improvement in future business conditions.
Since this survey only goes back to July of 2001, we only have one complete business cycle with which to evaluate its usefulness as an indicator for the broader economy. Since the Great Recession, the index contracted for one month in late 2010 and five months in 2011 -- the latter at a shallower level than at present.
The Empire State Survey is focused on manufacturing, so it's only a subset (albeit a very large one) of the Federal Reserve's Industrial Production Index, which covers manufacturing, mining, and electric and gas utilities. The upper left corner in the four-pack below shows the recent dip in Industrial Production. Note that this chart illustrates the percent off the all-time high.
See also the latest ISM Manufacturing Business Activity Index, which has been in contraction mode for four of the past seven months. This follows 34 consecutive months of expansion following the Great Recession. The December reading for this indicator did show a slight expansion in December at 50.7.
We'll keep a close eye on some of the regional manufacturing indicators in the weeks ahead.