In a surprising turnaround, the New York manufacturing sector showed substantial growth in September 2023, according to a report released by the Federal Reserve Bank of New York on Friday. The general conditions index, which measures the level of general business conditions in the state of New York, surged to a positive 1.9 in September from a negative 19.0 in August. This was a significant deviation from economists’ expectations, who had predicted the index to climb only to negative 10.0.
The unexpected spike in the headline index was driven by significant turnarounds in both new orders and shipments. The new orders index jumped to a positive 5.1 in September from a negative 19.9 in August, while the shipments index rose to a positive 12.4 from a negative 12.3 in August.
However, the employment situation presented a different picture with the number of employees index dipping slightly to a negative 2.7 in September from a negative 1.4 in August, indicating a faster decrease in employment.
The report also showed an increase in prices with the prices paid index inching up to 25.8 in September from 25.2 in August, while the prices received index climbed to 19.6 from 12.6 in August.
Looking ahead, firms continue to grow more optimistic about their six-month outlook. The index for future business conditions climbed to its highest level in over a year at 26.3 in September from 19.9 in August, suggesting that new orders and shipments are expected to increase significantly and employment is expected to grow.
Despite the unexpected growth, delivery times remained steady and inventories continued to contract as indicated by the report.
The Fed’s report provides an important insight into the health of the manufacturing sector within New York State, an essential component of the overall U.S economy. However, the slight decline in employment levels and the average workweek, as pointed out by the New York Fed, adds a note of caution to the otherwise positive report.
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