According to data from the Federal Reserve Bank of New York, manufacturing activity in New York State experienced a larger than expected drop in August. However, despite this decline, firms are feeling more positive about their prospects for the next six months.
Decrease in Business Conditions Index
The Empire State Manufacturing Survey's general business conditions index fell to minus 19.0 in August, down from 1.1 in July. This is the first time since May that the index has recorded a negative reading. Economists surveyed by The Wall Street Journal had anticipated a smaller decrease to just minus 1.4.
This decline indicates that manufacturing activity in August contracted moderately, falling below the zero-threshold that separates expansion from contraction.
Mixed Results for New Orders and Shipments
The new orders index also saw a significant decrease, dropping to minus 19.9 in August from a positive reading of 3.3 in July. Similarly, the survey's shipments index fell by 25.7 points to minus 12.3.
Little Change in Employment Levels
Despite the downturn in manufacturing activity, there was little change observed in employment levels. The index for the number of employees came in at minus 1.4, only slightly down from a positive reading of 4.7 in July.
Optimism for the Future
On a positive note, firms are increasingly optimistic about their future prospects. The index for future business conditions rose by 5.6 points to reach 19.9 in August, marking its highest level in over a year.
Additionally, it is expected that both new orders and shipments will increase significantly, while employment is predicted to grow considerably.
In conclusion, while manufacturing activity in New York State experienced a decline in August, firms maintain optimism for the future.