Factory activity in New York state slumped in January amid a surge in COVID-19 infections, but manufacturers remained upbeat about business conditions over the next six months.
The New York Federal Reserve said on Tuesday its “Empire State” index on current business conditions plunged 32.6 points to a reading of -0.7 this month. This was the first negative reading since June 2020.
A reading below zero signals a contraction in the New York manufacturing sector.
New York has been slammed by a vicious winter wave of COVID-19 infections, driven by the Omicron variant, which has severely disrupted business activity. The survey offered an early read of Omicron’s impact on the economy.
Manufacturers reported a sharp decline in orders. The survey’s new orders index tumbled 32 points to a reading of -5.0. There were also decreases in shipments and unfilled orders measures, though not on the same magnitude as the plunge in new orders. Factories continued to wait long periods for supplies to be delivered, keeping prices elevated.
But manufacturers were generally optimistic about the outlook for the next six months. The index for future business conditions dipped 1.3 points to a reading of 35.1 this month.
The capital expenditures index climbed two points to 39.7, a multi-year high, suggesting that firms plan significant increases in both capital spending in the months ahead.