The numbers: The New York Fed’s Empire State business conditions index plunged 14.9 points to negative 11.8 in March the regional Fed bank said Tuesday. Economists had expected a reading of 5.5, according to a survey by The Wall Street Journal.
Any reading below zero indicates deteriorating conditions. The index hit its lowest level since May 2020.
Key details: Both orders and shipments declined in March, the survey showed. There were “ongoing substantial increases” in input and selling prices.
The new-orders index fell 12.6 points to negative 11.2 in March, and the shipments index fell 10.3 points to negative 7.4.
Unfilled orders slipped 1.3 points to 13.1 in March while delivery times rose 11.1 points to 32.7.
Inventories rose 9.8 points to 21.5 in March, the highest level in years, the New York Fed said.
The prices received indexes inched higher to a record high in March.
Firms were generally optimistic about the next six months, with the future business conditions index rising 8.4 points to 36.6.
Big picture: Economists were worried that the shock from Russia’s invasion of Ukraine might pull the Empire State index down in March.
The Empire State index is the first of several regional manufacturing gauges to be released. They can frequently be volatile from month to month, but taken together they present one of the timeliest reads on the sector.
Manufacturing has been a bright spot of the pandemic. The Institute for Supply Management’s factory index has been above the 50 level that indicates improving conditions for 21 straight months.
In February, the ISM manufacturing index rose to 58.6 from 57.6 in the prior month.