This morning we got the latest Empire State Manufacturing Survey, which fell from the previous month. The diffusion index for General Business Conditions at 9.8 was a decrease of 10.0 from the previous month’s 19.8.

The Investing.com forecast was for a reading of 15.0.

The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.

Here is the opening paragraph from the report.

Business activity grew modestly in New York State, according to firms responding to the July 2017 Empire State Manufacturing Survey. The headline general business conditions index fell ten points to 9.8. The new orders index moved down to 13.3, and the shipments index fell to 10.5, suggesting that orders and shipments continued to grow, though at a somewhat slower pace than in June. Delivery times continued to lengthen, and inventory levels were fairly steady. Labor market indicators pointed to a small increase in employment and no change in hours worked. Input prices and selling prices rose at about the same pace as last month. Indexes assessing the six-month outlook suggested that firms remained positive about future conditions, though they were less optimistic than in June. [source]

Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Click this link to access a PDF set of charts of the individual components over the past 12 months.

Since this survey only goes back to July of 2001, we only have one complete business cycle with which to evaluate its usefulness as an indicator for the broader economy. Following the Great Recession, the index has slipped into contraction multiple times, as the general trend slowed. 2015 saw a gradual decline that picked up in 2016.