New York Region Manufacturing Activity Remains Strong

Activity remains strong this month in the New York manufacturing region but did slow slightly compared to December, to 17.7 for January's general business conditions index vs an upwardly revised 19.6 in December.

New orders did slow more than 7 points but remain very solid at 11.9 while unfilled orders are back into positive ground at 4.3 from minus 8.7. Shipments, at 14.4, slowed by more than 9 points though inventories rose noticeably, up more than 12 points to 13.8. Employment slowed very sharply, down more than 19 points to 3.8 from a sharply upward revised 22.9 in December. The initial employment reading for December was 5.1 with the change reflecting year-end updates to seasonal adjustments.

The 6-month outlook among the sample remains very strong, at 48.6 for a 2.3 point gain with the outlook for new orders up more than 5 points to 47.6. Price data show acceleration for inputs, up nearly 7 points to a very elevated 36.2 with selling prices likewise showing traction, up more than 10 points to 21.7.

Employment is a soft spot in January's report but strength is evident in unfilled orders and especially prices. This is the first indication on 2018's factory sector and, like last year's very strong run for the regional samples, conditions and optimism among these samples remain very strong.

Recent History Of This Indicator:
Forecasters are looking for continued strength in the January's Empire State index, at a consensus 19.0 vs December's 18.0. But there was a slight hint of weakness in the December report as unfilled orders contracted for a second month and hiring slowed noticeably. Six-month expectations for new orders were also down. Yet in general this report has been very strong for the last year and, as the first regional report to be released each month, has consistently and accurately telegraphed strength in subsequent reports including the Philly Fed and the Dallas Fed.