The August NY manufacturing index collapsed to -31.3 from +11.1 and well worse than the estimate of +5. That’s the weakest since May 2020 when it was at -48.5. New orders went from +6.2 to -29.6. Shipments dropped by almost 50 pts m/o/m to -24.1. Backlogs fell further below zero at -12.7, its 3rd straight month under. Inventories were down by 8 pts. Employment dropped a touch more than 10 pts to 7.4, the lowest since April. The workweek went negative at -13.1. Delivery times also went negative. As for pricing, those paid dropped to the slowest since January 2021 but prices received rose a touch.
After falling by 20 pts in July to -6.2, the 6 month outlook got a touch back above zero at +2.1. Expectations for prices paid and received rebounded with the latter getting back all of what it lost in July. New orders expectations also bounced m/o/m. Capital spending plans dropped again as if there is less cash flow available, or limited visibility in one’s business, there is less cash or desire to invest in one’s business in the short term.
Bottom line, the NY Fed said this was the “2nd largest monthly decline in the index on record, and among the lowest levels in the survey’s history.” Now we still of course have many more regional manufacturing survey’s to look at to see if this is a one off or not but such a rate of change is unlikely to be isolated to this region. So, go on and continue to debate the semantics of whether we’re in a recession or not but we should be paying much more attention to the trajectory of economic activity and this was an ugly report.
6 Month Business Outlook