New York Manufacturing Shrinks Less Than Forecast as Prices Cool

(Bloomberg) -- New York state factory activity contracted in June by less than forecast while a measure of prices received by producers fell to an almost one-year low.

The Federal Reserve Bank of New York’s general business conditions index increased 9.6 points to minus 6. A reading below zero indicates contraction, and the median forecast in a Bloomberg survey of economists called for a minus 10.

The gauge of prices received by state manufacturers dropped 7 points to 7.1, while an index of prices paid for materials decreased to the lowest level since the start of the year.

Empire State Manufacturing Gauge Shrinks as Prices Cool | Index of prices received falls to lowest level since July 2023

Meanwhile, the six-month outlook for overall activity jumped 15.6 points to 30.1, the highest level since March 2022 and a sign the state’s producers are more upbeat about the economy’s prospects. The outlook for both orders and shipments strengthened.

“Manufacturing conditions remained weak in New York State in June,” Richard Deitz, economic research adviser at the New York Fed, said in a statement. “Despite lackluster conditions, optimism about the six-month outlook rose to it’s highest level in two years.”

The data have been subject to wide swings on a monthly basis for more than two years. A broader gauge of manufacturing across the US has been stuck in contraction territory for all but one month since October 2022 amid weak demand and high borrowing costs limiting new investment.

The New York Fed’s regional gauge of current new orders, while still showing contraction, improved to minus 1 — the highest since September. Shipments expanded for the first time since February, while an index of current factory employment and a gauge of hours worked shrank at faster paces.

--With assistance from Chris Middleton.

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