By Xavier Fontdegloria
Factory activity in New York state leveled off in January from the previous month as demand for goods fell, according to survey data compiled by the Federal Reserve Bank of New York released on Tuesday.
The Empire State Manufacturing Survey’s general business conditions index fell sharply to minus 0.7 in January from 31.9 in December, missing the consensus estimate of 25.5 from economists polled by The Wall Street Journal. Any value above zero suggests that the region’s manufacturing sector is expanding.
The slightly negative reading follows 18 consecutive months of gains and suggests that growth in regional manufacturing activity has stalled after a period of significant expansion, the New York Fed said.
In January, about 22% of businesses surveyed said business conditions had improved over the month, while 23% said conditions had deteriorated.
Demand for goods showed signs of flagging. The new orders index fell sharply to minus five from 27.1 the previous month, indicating a slight drop in orders. The shipments index fell to one, suggesting that shipments remained broadly unchanged.
Labor market indicators signal that businesses continued to create jobs, but at a slower pace than the previous month. The number of employees index fell five points to 16.1, while the average work week index fell to 10.3, according to the report.
The delivery time index fell slightly to 21.6, suggesting that input delivery times continued to lengthen, albeit to a lesser extent than in December. Unfilled orders increased, albeit at a slower pace than the previous month, a sign that supply chain bottlenecks are not getting worse.
Price indices fell, but remained high. The index of prices paid rose from 80.2 to 76.7 and the index of prices received fell to 37.1 from 44.6. Both indicators point to substantial increases in input prices and selling prices, albeit at a slower pace than last month, the New York Fed said.
Survey respondents were generally optimistic about improving conditions over the next six months, the report said. The future business conditions index fell slightly from 36.4 to 35.1, but remained strong as companies reported strong plans for capital and technology spending in the months ahead.
Write to Xavier Fontdegloria at [email protected]
(END) Dow Jones Newswire
January 18, 2022 08:51 ET (13:51 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.