Manufacturing Levels Plummet to 2023 Lows, Shatter Expectations

Manufacturing activity in New York State fell sharply in May 2023, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. The headline general business conditions index plunged 43 points, to -31.8, drastically falling below the expected level of -2.5. The survey reveals that new orders and shipments also plummeted, in stark contrast to last month’s significant increase. 

Employment and hours worked declined for a fourth consecutive month, and prices increased slightly.

The report shows that both delivery times and inventories contracted in May, with delivery times shortening somewhat. The index for the number of employees remained negative at -3.3, and the average workweek index held below zero at -3.5, indicating a slight decline in employment and hours worked. While the prices paid index was little changed, the prices received index held steady at 23.6, suggesting a minimal change in the pace of price increases.

The future business index remains negative, indicating that businesses are not expecting any significant improvement in conditions over the next six months. Precisely in line with last month’s report, when 49 percent of respondents reported that conditions had worsened, 49 percent reported a decline for May as well. Just 17 percent reported an improvment.

The new orders index sank 53 points to -28.0, and the shipments index dropped 40 points to -16.4. The capital spending index fell to its lowest level in three years at 0.9, suggesting weakened capital spending plans, while the technology spending index fell to 1.9.

The decline in manufacturing activity in New York State contrasts sharply with the positive economic rhetoric coming from the Biden administration in recent months. 

At the White House press briefing last Friday, Mitch Landrieu, the administration’s infrastructure implementation coordinator, told The Epoch Times that the United States is experiencing an “economic boom,” and in February, President Joe Biden touted his “historic progress” in creating domestic jobs.

“When President Biden took office, the economy was in crisis, millions were out of work, and Main Streets were shuttered,” read a White House press release from earlier this year. “In two years, the president has overseen a historic economy recovery and laid the foundation for steady and stable growth in the years to come.”

The administration has published similar comments on the country’s manufacturing base, saying his economic plans have generated a “manufacturing boom across the country.” In the same press release, the White House pointed to domestic infrastructure incentives for sectors like broadband, semiconductors, and healthcare as areas of his economic plan’s success.

This latest report by the Federal Reserve Bank of New Yor, however, paints a different picture of the state of the economy.