Is Manufacturing Coming Back from Recession?

According to recent business surveys provided mainly by research company S&P Global but by other firms as well, such as Caixin, factories in the US, the Eurozone, and throughout the developed world have been reporting a constant decrease in activity. There were some who claimed that backlogs in the industry that grew in the early months of the coronavirus pandemic, have been affecting the activity, although it’s uncertain how long they lasted and besides that, new orders for manufactured products have also been contracting, which confirms that manufacturing is really suffering.

According to S&P Global, the manufacturing sector in the United States has been contracting for more than a year. According to the Institute for Supply Management, the industry contracted for 12 straight months in October, at a quicker rate than the previous month, so it is an official recession. Yesterday’s New York FED manufacturing index turned negative again, so there’s no light at the end of the tunnel right now, unless something changes.

New York Fed Manufacturing Index for October 2023

• Empire manufacturing Index for October -4.60 points versus -7.00 points estimate.
• September month Empire manufacturing index was 1.90 points

Details:

• New orders -4.2 points versus 5.1 points last month
• Shipments 1.4 points versus 12.4 last month
• Prices paid 25.5 points versus 25.8 last month
• Prices received 11.7 points versus 19.6 last month
• Employment 3.1 points versus -2.7 last month
• average employee work week 2.2 points versus -5.0 last month
• Unfilled orders -19.1 points versus -5.2 last month
• Delivery times -6.4 points versus 2.1 last month.
• Inventories -2.1 points versus -6.2 last month
• Average work week versus -5.0 points last month

6 Month Forward:

• General business conditions 23.1 points versus 26.3 points last month
• New orders 19.4 points versus 34.8 points last month.
• Shipments 15.2 points versus 33.7 last month.
• Prices paid 28.7 points versus 37.1 last month.
• Prices received 16.0 points versus 28.9 last month.
• Employment 21.0 points versus 15.9 last month.
• Average employee work week 5.3 points versus 0.0 last month.
• Unfilled orders -5.3 points versus 5.2 last month.
• Delivery time -4.3 points versus 4.1 last month.
• Inventories 5.3 points versus 0.0 last month.
• Capital expenditures 9.6 points versus 10.3 last month.
• Technology spending 4.3 points versus 5.2 last month

In October 2023, business activity in New York State fell somewhat, with the overall business conditions index falling to -4.6, a seven-point drop. New orders fell as well, although shipments remained relatively steady. Orders that were not filled were reduced, and delivery times were cut, but inventory remained stable. Employment and the average workweek both increased somewhat. Input costs increased at the same rate as the previous month, while selling price rises slowed.

Despite these worries, enterprises remained rather optimistic about future circumstances (6 months ahead), with higher orders, exports, and employment expected, albeit at a slower pace, while capital investment intentions remained somewhat weak.

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