The Empire State Manufacturing Survey: An Economic Indicator

The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. This survey serves as a valuable economic indicator, providing insights into the manufacturing sector’s performance, trends, and overall economic health. This article delves into the specifics of the Empire State Manufacturing Survey, its components, significance, and impact on economic analysis.

What is the Empire State Manufacturing Survey?

The Empire State Manufacturing Survey collects data from approximately 200 manufacturing executives in New York State. These respondents provide information on various aspects of their business activities, including orders, shipments, employment, and pricing. The survey’s results offer a snapshot of the state’s manufacturing conditions, which can be indicative of broader economic trends.

Key Components of the Survey

General Business Conditions Index:

• This is the headline index of the survey, reflecting the overall sentiment of manufacturing executives about the business environment. It is calculated as the difference between the percentage of respondents reporting improvements and those reporting declines in business conditions.

New Orders Index:

• This index measures the change in the volume of new orders received by manufacturers. An increase in new orders typically signals future production growth.

Shipments Index:

• This index tracks the change in the volume of shipments made by manufacturers. It provides insights into current production levels and demand.

Unfilled Orders Index:

• This index indicates the change in the volume of unfilled orders, reflecting backlogs and future production potential.

Delivery Time Index:

• This index measures the change in delivery times for goods. Longer delivery times can indicate supply chain bottlenecks or increased demand.

Inventories Index:

• This index tracks the change in inventory levels. Rising inventories might suggest slower sales or overproduction, while falling inventories could indicate stronger sales or underproduction.

Prices Paid and Prices Received Indexes:

• These indexes measure changes in input costs (prices paid) and the selling prices of finished goods (prices received). They provide insights into inflationary pressures within the manufacturing sector.

Employment Index:

• This index reflects changes in employment levels within the manufacturing sector, offering insights into labor market conditions.

Average Workweek Index:

• This index measures changes in the length of the average workweek for employees, indicating labor demand and production intensity.

Significance of the Empire State Manufacturing Survey

Economic Indicator:

• The survey is considered a leading economic indicator, providing early signals about the health of the manufacturing sector and the broader economy. Analysts and policymakers closely monitor the survey results to gauge economic trends and inform decision-making.

Business Sentiment:

• The survey captures the sentiment of manufacturing executives, reflecting their confidence or concerns about the business environment. Positive sentiment can indicate economic optimism, while negative sentiment might signal economic challenges.

Inflation Insights:

• The prices paid and prices received indexes offer valuable information on inflationary pressures within the manufacturing sector. This data can influence monetary policy decisions by the Federal Reserve.

Labor Market Trends:

• The employment and average workweek indexes provide insights into labor demand and employment conditions within the manufacturing sector. This information can help assess the overall health of the labor market.

Impact on Economic Analysis

Economists, analysts, and investors use the Empire State Manufacturing Survey to make informed assessments and forecasts about the economy. For example:

• Investment Decisions: Investors may use the survey’s results to adjust their portfolios based on the outlook for the manufacturing sector and overall economic conditions.
• Monetary Policy: The Federal Reserve may consider the survey’s insights when making decisions about interest rates and other monetary policies.
• Economic Forecasting: The survey helps economists refine their economic forecasts, providing early indications of trends that might not yet be visible in other economic data.

The Empire State Manufacturing Survey is a vital tool for understanding the manufacturing sector’s performance and its implications for the broader economy. By capturing the sentiment and activity of manufacturing executives in New York State, the survey offers valuable insights into economic conditions, inflationary pressures, and labor market trends. As a leading economic indicator, it plays a crucial role in informing investment decisions, monetary policy, and economic analysis.