This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at -11.2 was a decrease of 15.7 from the previous month's 4.5. The Investing.com forecast was for a reading of -1.0.

The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.

Here is the opening paragraph from the report.

Business activity declined in New York State, according to firms responding to the December 2022 Empire State Manufacturing Survey. The headline general business conditions index fell sixteen points to -11.2. New orders moved slightly lower, while shipments edged higher. Delivery times and inventories were little changed. Labor market indicators pointed to a moderate increase in employment, but a slightly shorter average workweek. Input prices and selling prices increased at about the same pace as last month. Looking ahead, firms expect some improvement in business conditions over the next six months, but optimism was very subdued. [Full report]

Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Since this survey only goes back to July of 2001, we only have two complete business cycles with which to evaluate its usefulness as an indicator for the broader economy. Following the Great Recession, the index has slipped into contraction multiple times, as the general trend slowed. We saw a gradual decline in 2015 that picked up in 2016, with a giant dip in 2020 due to COVID-19.

Here is an overlay of the current and future conditions (a six-month outlook).

Meanwhile, here's another look at the latest ISM Manufacturing Business Activity Index.

Let's compare all five Regional Manufacturing indicators. Here is a three-month moving average overlay of each since 2001 (for those with data).

Here is the same chart including the average of the five. Readers will notice the range in expansion and contraction between all regions.

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