The string of manufacturing negatives continues unabated with the Empire State Survey. Economists expected another negative month, but the result was worse than the lowest Econoday economist’s prediction of -8.50.

Negatives are beginning to run in Empire State with the index at minus 10.74 in November, right in line with the prior four readings and well below the Econoday consensus for minus 5.00. Several components are showing extended weakness including unfilled orders, at minus 18.18 for the lowest reading of the year, and also the workweek, at minus 14.55 for a fifth straight decline and the weakest run since mid 2013. With unfilled orders down and the workweek down, it’s no surprise that employment is down, at minus 7.27 for a third straight loss and the weakest streak since late 2009. And prices, even outside of energy and commodities, are not helped by weak demand with prices for final goods at minus 4.55 for a third straight decline and the longest run of contraction since early 2013.

Good news is hard to find but there is easing weakness in new orders, at minus 11.82 vs October’s minus 18.91, and in shipments as well, at minus 4.10 vs minus 13.61. Still, this is the sixth straight decline for new orders and the fourth straight for shipments. Manufacturers are keeping their inventories down while delivery times, reflecting the weakness in shipments, are speeding up.

This report is the first indication on November’s factory sector and it points to another run of weak regional reports, starting Thursday with the Philly Fed. The factory sector, hit by weak exports and in contraction for a full year, is becoming perhaps the economy’s Achilles heal — and also perhaps a dovish wildcard for the December FOMC.

Business Conditions vs. Six Months Expectations

From the Empire State Report

Business Conditions Continue to Worsen

Business activity declined for a fourth consecutive month for New York manufacturers, according to the November 2015 survey. The general business conditions index was little changed at -10.7. Nineteen percent of respondents reported that conditions had improved over the month, while 29 percent reported that conditions had worsened. The new orders index climbed seven points, but at -11.8, it pointed to an ongoing decline in orders. Similarly, the shipments index climbed ten points to -4.1, signaling that shipments also declined. The unfilled orders index fell three points to -18.2. Delivery times were shorter again this month, with the delivery time index holding steady at -10.9. The inventories index fell ten points to -17.3, indicating a significant reduction in inventory levels.

Labor Market Conditions Weaken Further

The prices paid index edged up to 4.6, suggesting that input prices increased somewhat after holding steady last month. The prices received index remained negative at -4.6, indicating that selling prices declined for a third consecutive month. Labor market conditions continued to weaken. The index for number of employees was little changed at -7.3, a sign that employment levels fell for a third consecutive month, and the average workweek index moved down seven points to -14.6, its lowest level since mid-2011.


The Empire State Survey is the initial salvo of Fed’s regional manufacturing reports for November. The rest of the reports will likely be negative as well.

Employment in the New York region and hours worked are both trending lower.

Meanwhile, prices paid is in positive territory while prices received is negative. This represents a cost squeeze on manufactures even as demand weakens.

Mike “Mish” Shedlock