New York manufacturing activity slumps to lowest level since 2020
Business conditions dropped to the lowest level since May 2020
US manufacturing revived by supply chain setbacks
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Manufacturing activity in New York state plunged in March for the first time since the early days of the COVID-19 pandemic as orders and shipments dropped and delivery times increased.
The Tuesday report from the Federal Reserve Bank of New York showed that the general business conditions index fell to minus 11.8 – the lowest since May 2020 – from 3.1 the previous month. Any reading below zero indicates contraction; the gauge was also well below analysts' forecast of 5.5.
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The new orders index, meanwhile, dropped to minus 11.2 in March, while the shipments index fell to negative 7.4.
A container ship is unloaded at the Virginia International Gateway terminal in Norfolk, Virginia, on May 10, 2019. (AP Photo/Steve Helber, File / AP Newsroom)
The survey was conducted between March 2 and 9, when the Russian war on Ukraine intensified and broadened into a massive humanitarian crisis.
The U.S. and its European allies have responded to the conflict by levying a widening array of economic penalties against the Kremlin, including targeting Moscow's energy sector, removing some Russian banks from the Swift financial system, and blocking its central bank from selling dollars, euros and other foreign currencies in its reserve stockpile.
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The crisis exacerbated already sky-high global inflation by impeding the world's access to energy supplies: Oil prices at one point climbed above $107, though they have since dipped below $100 a barrel. In December, for comparison, prices hovered around $65 a barrel.
People walk past a currency exchange office in Moscow, Russia, on Feb. 28, 2022. (AP / AP Newsroom)
Responses collected by the Fed show the first European war in decades sparked a jump in commodities prices. The prices received indicator also climbed closer to a record high in March.
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Still, although the report represented a setback in current conditions, respondents remained more optimistic about the future over the next six months, with the future business condition index climbing 8.4 points to 36.6.
The Empire State Index is the first of several regional manufacturing measures released by the Fed.