The Empire State index fell 33 points in January from December, to -0.7 points, for the first time in the red after 18 months of growth.
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Manufacturing activity in the New York area recorded a slight decline in January, for the first time since June 2020, according to the monthly indicator “Empire State” published Monday by the regional branch of the Federal Reserve (Fed).
The index measuring general activity fell 33 points in January compared to December, to fall to -0.7 points. This is the first time that activity has gone back into the red, after 18 months of growth.
Analysts had anticipated lower activity growth in January than in December, but had not anticipated this fall, and saw the index fall to 25 points.
“Business activity has stabilized sharply in New York State, according to companies responding to the survey,” the Fed said in its statement, adding that this suggests that “growth has stagnated after a period significant expansion.
Indeed, when the index is greater than zero, this means that the activity is growing; but as soon as the index falls below this bar, it contracts compared to the previous month.
Measured in a highly industrialized region, the New York State manufacturing activity index is considered a good barometer of the evolution of the American economy.
“The report makes no mention of the Omicron wave, but it is arguably not just a coincidence that the index fell just as cases in New York state peaked on January 10; the responses to the survey were received from January 3 to 10,” notes Ian Shepherdson, economist for Pantheon Macroeconomics.
“Manufacturing activity in New York State is off to a weak start in 2022, as stronger Covid and supply chain challenges stall growth,” also analyzes Oren Klachkin, economist for Oxford Economics.
He points out that it is “a reminder that COVID is still exerting a significant influence on the course of the recovery”, but he anticipates “strong demand (which) will maintain buoyant activity this year for factories in the region, as well as of the whole of the United States”.
Like him, New York-area manufacturing companies are overwhelmingly optimistic about the next six months, the survey says.
In detail, “new orders fell slightly, while deliveries remained stable. Delivery times continued to lengthen and order books increased,” the Fed said.
The situation is improving a little on the employment front.
As for prices, the indices measuring them have fallen, which means that their rise is moderating, but they “remained high”, it is indicated.
Factories in the United States continue to face global supply difficulties, which are causing shortages and driving up prices. They are also struggling to find enough manpower, which slows down their production, even though consumer demand is strong.
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