Sharp decline in critical US manufacturing indicator

The US Empire State Factory Index in August suffered its second-biggest decline in 21 years as a decline in orders and shipments pointed to a sharp decline in demand. While recession discussions remain on the agenda in the US, negative signals continue to come from manufacturing indicators. The General Business Index, one of the indicators of the US Empire State Factory Index, suffered its second-biggest decline since records began in 2001 as a decline in orders and shipments pointed to a sharp decline in demand. The US Empire State Factory Index fell from 11.1 to minus 31.3. While the data coming in below zero pointed to a contraction, the figures were weaker than even the most pessimistic estimates in a Bloomberg survey of economists. According to the report, the share of factories reporting weak operating conditions in the state doubled to 43.6 percent in August. Similar deteriorations were observed in orders and shipments. The orders index also fell from 6.2 to -29.6, while the shipments indicator fell from 25.3 to -24.1. Both figures, as well as the general business conditions indicator, were the weakest since May 2020, when the economy first began to emerge from the pandemic lockdowns. Looking ahead, producers in the state are considered to be somewhat optimistic. The six-month outlook index rose from minus 6.2 in July to 2.1. Meanwhile, the prices paid index fell back to its lowest level since the beginning of last year, while the bank’s price indicator continued to rise and remain high. The report is the first of several regional Fed bank production figures to be released in the coming weeks.