December 2018 Empire State Manufacturing Index Declined

The Empire State Manufacturing Survey index significantly declined but remains in expansion. The key internals declined with unfilled orders now in contraction.

Analyst Opinion of Empire State Manufacturing Survey

With both the main index and key indices declining, this was a much worse report than last month..

Econintersect reminds you that this is a survey (a quantification of opinion). Please see caveats at the end of this post. However, sometimes it is better not to look to deeply into the details of a noisy survey as just the overview is all you need to know

  • Expectations from Econoday were for a reading between 18.0 to 24.0 (consensus 21.0) versus the 10.9 reported. Any value above zero shows expansion for the New York area manufacturers.
  • New orders subindex of the Empire State Manufacturing declined but remains in expansion, whilst the unfilled orders sub-index declining and now in contraction
  • This noisy index has moved from 18.0 (December 2017), 17.7 (January 2018), 13.1 (February), 22.5 (March), 15.8 (April), 20.1 (May), 25.0 (June), 22.6 (July), 25.6 (August), 19.0 (September), 21.1 (October), 23.2 (November) - and now 10.9

From the report:

Empire State Manufacturing Survey


The above graphic shows that when the index is in negative territory that it is not a signal of a recession - of 10 times in negative territory (since the Great Recession) - no recession occurred. Conversely, a positive number is likely to be indicating economic expansion. Historically, when it does make a correct negative prediction it can be timely - this index was only two months late in going negative after what was eventually determined to be the start of the 2007 recession.

This survey has a lot extra bells and whistles which take attention away from the core questions: (1) are orders and (2) are unfilled orders (backlog) improving? - and the answer is that the key internals declined with unfilled orders in contraction.

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