This morning’s report on manufacturing activity in the New York region is the first of the regional Fed indices to be released for November, and it didn’t paint too positive of a picture. Heading into the report, economists were forecasting the headline index to come in at a level of -6.0, but the actual reading came in a bit weaker at -10.7. This represents the fourth straight month that the headline index was below -10, which hasn’t happened since the last recession when it stayed below that level for seven months. Today’s report was also the ninth time in the last ten reports that the Empire Manufacturing report was weaker than expected, so clearly economists have been having difficulties in grasping the extent of the weakness in the manufacturing sector for the NY region.
The chart below shows the historical levels of the headline Empire Manufacturing index as well as expectations for six months from now. Interesting to note here is the fact that while the current conditions index has been getting less worse for the last three months, expectations have been steadily deteriorating.
The table below breaks out this month’s Empire Manufacturing report by each of the index’s sub-components and shows the one month change in both current conditions and expectations for the next six months. While the headline report was weaker than expected, we would note that most of the components were less worse in November than October in terms of both current conditions and expectations for the next six months. For current conditions, six out of nine components increased in November, while seven out of nine components saw improvement in terms of their outlooks.