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First Cut: New York Fed manufacturing survey points to relatively stable conditions in March

The New York Fed’s Empire State Manufacturing Survey showed activity remained mildly expansionary in March. The general business conditions index slipped to 3.7 in March from 8.8 in February and was much the same as the 3.9 in January. The future conditions index dipped to 29.6 in March from 32.3 in February but was stronger than the 17.8 in January. Expansion is present, if at a slower pace and more unevenly than in the past year or two. Expectations for the future have moderated, but not deteriorated significantly.

The index for new orders slowed to 3.0 in March from 7.5 in February and shipments was down to 7.7 after 10.4. Employment rose sharply to 13.8 in March from 4.1 in February, while the average workweek contracted at -3.4 after 2.5 in the prior month. The reading for the workweek was the first negative since -3.5 in November 2016. Delivery times dipped to 1.4 in March after 5.0 in January. Inventories were at neutral (0.0) after -1.4 in February.

Along with higher energy costs, the prices paid index rose to 34.1 in March from 27.1 in February. However, it remains on track for low upward price pressures for input costs. Prices received continued to show a little pricing power at 18.1, but less than in the prior month at 22.9.

The NY-ISM equivalent index – calculated from the five components closest to the ISM Manufacturing Index – was unchanged at 52.6 in March from February. The New York measure is the first of the monthly District Bank surveys of manufacturing and it is unwise to read too much into this number, especially since it does not have the strongest correlation with the national report. However, it does hint that conditions for the manufacturing sector are relatively stable in the third month of the year even if at a less hectic pace than in 2018.

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