Empire State manufacturing index falls to lowest since May 2020

Manufacturing activity in the New York region declined in March for the first time since early in the Covid-19 pandemic, according to a survey released on Tuesday .

The New York Fed’s Empire State general business conditions index fell to -11.8 from 3.1 in February. This marked the lowest reading since May 2020 and was below expectations of 7.0.

According to the survey, 24% of respondents reported that conditions had improved over the month, while 35% said they had worsened.

The new orders index declined 12.6 points to -11.2 in March, while the shipments index printed at -7.4 compared to 2.9 in February. The delivery times gauge rose 11.1 points to 32.7 and the inventories index came in at 21.5 in March, up from 11.7 in February.

Oxford Economics said: "Longer delivery times, greater unfilled orders, and persistently elevated input costs suggest that regional manufacturing activity may be bumping up against its capacity limits.

"Much improved health conditions and the removal of most pandemic restrictions will fuel a strong revival for in-person services, but there's still plenty of goods demand to keep manufacturing growing at a hearty pace. In fact, supply will be manufacturing's main problem in 2022.

"The war in Ukraine and the worst outbreak of Covid in China since March 2020 will worsen logistics bottlenecks and stoke more inflationary pressures, aggravating already severe stress in supply chains."