In March, the Empire manufacturing index for New York recorded a contraction at -20.0, compared to an estimate of -1.5. New orders fell to -14.9 and shipments decreased to -8.5, indicating weakened demand.
The inventory index rose to 13.3, the highest level in over two years. Unfilled orders remained unchanged, while the delivery times index was recorded at 1.0.
Rising Price Pressures
The prices paid index increased to 44.9, marking the highest inflation rate in two years, alongside a rise in prices received to 22.4. The employment index fell to -4.1, reflecting a decline in workforce, while the workweek index dropped to -2.5.
Future business activity expectations declined to 12.7, with capital spending plans remaining weak. Input prices are anticipated to stay high, and supply availability is expected to tighten.
Retail sales data for February revealed a 1% increase in the control group contributing to GDP, exceeding the 0.3% estimate. Nonetheless, anecdotal reports suggest consumer spending may have decreased in March.
This update indicates a weakened factory climate in New York, with manufacturing output slowing more than predicted. The dip in new orders suggests businesses are pulling back on purchases, while the decline in shipments supports the notion that demand is softening. A rise in inventories, the highest in over two years, further reinforces the idea that goods are accumulating rather than moving through supply chains. With unfilled orders unchanged and delivery times barely shifting, supply-side pressures appear to be easing slightly, though not necessarily in a positive way.
Price pressures remain an issue, as seen with the swift rise in the prices paid index. The highest reading in two years suggests manufacturers are facing stronger cost burdens. The increase in prices received, though notable, is not keeping pace, implying some difficulty in passing higher costs along. Meanwhile, employment metrics paint a less encouraging picture. A declining workforce points towards job reductions, and a shrinking workweek hints at reduced labour demand. Companies appear hesitant to expand operations, and expectations for business activity in the coming months show little confidence in a quick rebound.
Retail Sales And Economic Activity
Retail data presented a somewhat different angle. The jump in February’s control group figure—a key measure for GDP growth—surpassed forecasts, giving the impression of stronger consumer spending momentum. However, anecdotal evidence suggests that purchasing patterns might have weakened in March. If that is indeed the case, it would be consistent with the downturn in manufacturing and potentially indicate that broader economic activity is losing steam.
Expectations around capital investment plans remain tepid. Businesses project input costs to remain elevated while supply constraints could become more pronounced. This dynamic could limit expansion efforts and contribute to ongoing uncertainty. The balance between resilient consumer demand and sustained cost pressures will likely play a key role in shaping short-term market movements.
