New York State manufacturing activity plunged by the second-most in the data back to 2001, with declines in orders and shipments that indicate an abrupt downturn in demand.
The Federal Reserve Bank of New York's August general business conditions index fell more than 42 points to minus 31.3, with the drop just behind that seen in April 2020, a report showed Monday. A reading below zero indicates contraction, and the figure was much weaker than the most downbeat forecast in a Bloomberg survey of economists.
The share of state factories reporting weaker business conditions nearly doubled in August to 43.6% from a month earlier in the month. Similar deteriorations were seen for orders and shipments.
The report is the first of several regional Fed bank manufacturing numbers set to be released over the next few weeks. The New York figures are volatile, but the magnitude of the slowdown is still alarming and could potentially lead to a steeper downturn in manufacturing than previously thought.
The Fed banks' index of orders fell to minus 29.6 from 6.2, while the gauge of shipments fell to minus 24.1 from 25.3. Both measures, as well as the overall business conditions gauge, were the weakest since May 2020, when the economy was beginning to emerge from initial pandemic lockdowns.
The manufacturers of the state were slightly upbeat, looking ahead. The six month outlook index increased to 2.1, from minus 6.2 in July.
The prices-paid index settled back to its lowest since the beginning of last year, though the bank's gauge of prices went up and remained elevated.