Empire State Manufacturing SurveyThe Empire State Manufacturing Index, which provides a snapshot of a key U.S. economic region, jolted investors Monday. It took a surprising plunge to a minus 11.14 reading in November -- the index's first negative measure since July -- the Federal Reserve Bank of New York announced today.

A Bloomberg survey had expected the Empire State index to dip to 15 in November from 15.73 in October. The index was at 4.14. in September. Readings above zero indicate manufacturing activity is growing; below zero, contracting.

Several key components fell below zero in the latest report. New orders plummeted 37 points to minus 24.38, and shipments fell from 25.89 to minus 6.13. The number-of-employees component dipped from 11.69 to 9.09, and the average workweek tumbled from 19.48 to minus 12.99.

The November report's bright spots were the futures components, which generally climbed.

Holding More Cash Than Usual


In the survey's supplemental section, manufacturers were asked about their cash holdings and debt financing. A majority of respondents, 52%, reported that they expected their outstanding debt levels to remain unchanged over the next year, 30% expected debt to decline and 18% foresaw an increase.

Regarding cash holdings, 35% of firms said they were currently holding higher-than-usual (excess) cash balances, while just 22% indicated that cash balances were lower than usual.

Concerning the 12-month outlook, 42% of respondents expected their cash holdings to increase, and 19% said cash balances would decline. Finally, on capital spending over the next year, respondents indicated that they would use cash to finance nearly 60% of expenditures, the same as in November 2009, but up from 46% in November 2008.

A Decided Disappointment

Economists, business executives and investors monitor the Empire State index because it typically provides an early read on larger manufacturing surveys released later in the month, such as the Institute for Supply Management's manufacturing survey. In October, the ISM index rose 2.5 points to 56.9 -- a level that confirmed an ongoing economic expansion.

November's Empire State Manufacturing report is a decided disappoint because it was expected to show an ongoing expansion at roughly the same pace as October. Instead, it indicated a cooling.

Still, investors shouldn't read too much into the report. As one month's data, it's not nearly enough to indicate a trend, which requires three to five months of data. That said, the November Empire State report does provide another sign that the economic recovery continued in early fall but at a cooler pace. That further confirms slowdown data released by the U.S. Federal Reserve earlier this month.

Increase your money and finance knowledge from home

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Portfolio Basics

What are stocks? Learn how to start investing.

View Course »

Add a Comment

*0 / 3000 Character Maximum

18 Comments

Filter by:
Drewboy60

Dollar is about to devalue by 50 percent. Thanks to Obama and his anti business agenda.Two years of farting around. Now Obama can get his wish of America becoming a third world country.

November 17 2010 at 3:41 PM Report abuse rate up rate down Reply
ron

Things won't change til we get manufacturing back to the U.S. It will be a drastic shift in our buying habits, as things will cost more for a while, but we consume too much anyway...i.e. quantity over quality. So there's the choice, revert to conservative principles, or watch our economy flonder at a way lower baseline. And yeah, we're spending way too much on government giveaway (entitlement) programs. Too many people happy with living off of taxpayers.

November 17 2010 at 2:18 PM Report abuse +1 rate up rate down Reply
tesla220

Hmm lets see. 1: Many high tech and professional jobs going over seas, many entry level jobs being taken by illegal workers. 2: The GUBBAMENT pays people to sit around and do drugs without having to produce a thing for it. 3: What ever happened to "Give a man fish, feed his family for a day or give a man a fishing rod and he feeds his family for life" ? 4: Sally and Jonny run for class President. Jonny suggests work harder and get extra recess time. Sally suggests "FREE ICE CREAM!!!" Sally wins by a landslide. Were all doomed by people voting for those who promise us something for nothing.

November 17 2010 at 1:44 PM Report abuse +3 rate up rate down Reply
themaskctf

I wonder how Obama's spin machine will make this sound like it's a GOOD thing???

November 17 2010 at 11:06 AM Report abuse +3 rate up rate down Reply
eteeuwe

It takes aproximately six months of a major change in economic policy to register at the manufacturer level. I'm Marine Engineer in the Offshore Oil Drilling industry with 37 years in the business. When I, and my associates do not design and specify, the RFQ's and factory Orders are not made. Obama's Offshore Oil Drilling Moratorium of Deepwater, and also what we refer to in the industry as the "Permitorium"(the refusal to issue Permits for Shallow water drilling)has placed about every design Engineer in the business on furlough. With nothing in development for Offshore, tens of $Billions of dollars of plate, pipe, diesel engines, generators, pumps, motors and every other heavy and light manufactured good imaginable that the Oil Industry usually orders from the American manufacturing belt has been cancelled. It is not only the 12,000 or so Offshore Oil Rig workers that Obama has put out of work. The Oil Industry, like the auto industry, is one of the largest consumers of heavy manufactured goods in the U.S..

November 17 2010 at 10:16 AM Report abuse +7 rate up rate down Reply
ksmwtm

Post election numbers VS PRE-election SPIN numbers! Founding Fathers Structural Genius could NOT legislate in ETHICS for business or POLITICANS or VOTERS! Without ACCOUNTABILITY there may not be a recovery! If the FRAUDers & FAILURES get away with this Financial FRAUD--then 2012 throw OUT the Remainder of the Rascales!!!

November 17 2010 at 9:41 AM Report abuse +2 rate up rate down Reply
chase5300

EVERYONE: please stop blaming Obama for the mess we are in. BOTH political parties are totally corrupt, isn't that clear by now?!!?? The GOP stood by and watched GWBush lose 8 million jobs to overseas, start two long expensive wars, let oil soar from 13 to 80 dollars a barrel, and on and on. They are NO better than the DEMs, who did NOTHING about WALL ST. and nothing to reduce HEALTH CARE costs. We need a REAL revolution in this country. I hope the TEA party will do something....anything!

November 17 2010 at 9:17 AM Report abuse +6 rate up rate down Reply
8 replies to chase5300's comment
fpeirce

No - don't pay attention to yet another index pointing out that the Obama administration have screwed things up to the point of no return. Guess what, now that Obama has "fixed" the economy, my company is right now deciding on whether to have a third round of layoffs before or after Christmas. Thanks Barrack, for bringing Hope and Change to us all.

November 17 2010 at 8:53 AM Report abuse +2 rate up rate down Reply
GOOD MORNING

GOOD MORNING>>>Depression, was going down bad starting in the eightys.And now it is call flat line right now.And no all this is not President Obama fault. This is something that was left behind when he walk into the white house.The economic recovery,well not ever be the same.But we can hope it gets a little better.

November 17 2010 at 8:52 AM Report abuse -1 rate up rate down Reply
bill

Gee....is there any wonder? The anointed one is taking care of the banks lining their pockets in preparation for the run in 2012 which is how he got in in the first place....its all about money. The banks are making billions without lending a dime since they think its only fair that they get back what they are losing on foreclosures. If they are borrowing the money at o% interest they are making money doing nothing so you don't need capitalism for them to survive. Obama does not care about America, he has already stated we will not be the leader in globalism. He wants America to be the new 3rd world.

November 17 2010 at 7:16 AM Report abuse +11 rate up rate down Reply