Empire State manufacturing index drops in September

Business conditions in the New York region deteriorated in September, according to a survey from the New York Fed.

The Empire State manufacturing index fell to 19.0 from 25.6 in August, missing expectations for a reading of 23.0. The survey found that 40% of respondents reported an improvement in conditions over the month, while 21% reported a worsening.

The new orders index was little changed at 16.5 and the shipments index fell 11 points to 14.3. The index for the number of employees held steady at 13.3 while the prices paid index was also steady at 46.3.

Meanwhile, optimism about the six-month outlook deteriorated, with the index for future business conditions down five points to 30.3.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the data was "a bit disappointing".

"After the very strong ISM manufacturing survey for August, we hoped to see the Empire State index strengthen in September. But both the headlines and the details have weakened, widening the gap between the two surveys. Empire State new orders nudged down only trivially, but shipments fell sharply and delivery times weakened too. As a result, the weighted sum of the Empire State’s components point to a sharp drop in the September ISM. The two series don’t always move together, as August’s numbers demonstrated, but we’re now very curious to see what the other key regional surveys - the Philly Fed, the Chicago PMI and the Richmond Fed - have to say about manufacturing activity this month.

"Our core view remains that the rate of growth of output likely has peaked for this cycle but we see no evidence that a real slowdown is underway. That view will change, though, if the recent weakening in the Empire State continues and is replicated in other surveys."