Why is European Business Activity Declining in December?

The December 2023 Empire State Manufacturing Survey, as the Federal Reserve Bank of New York reported, portrays a significant downturn in various Business Activity economic indicators. With a substantial drop in the General Business Conditions Index and continued declines in new orders, shipments, and employment levels, the report sheds light on a challenging landscape within New York State’s business sector.

The latest report by the Federal Reserve Bank of New York reveals a downturn in business activity within New York State as per the December 2023 Empire State Manufacturing Survey.

Key Highlights:

• General Business Conditions Index drops 24 points to -14.5, indicating a substantial decline in business sentiment.
• New orders decline for the third consecutive month, falling 6 points to -11.3, while shipments plummet 16 points to -6.4.
• Unfilled orders remain at -24.0, showing a continued significant decline, and inventories retreat 14 points to -5.2.
• Employment sees a modest decline, with the number of employees dropping by 4 points to -8.4.
• Optimism slightly improves, yet firms remain cautious, with the future business conditions index rising 13 points to 12.1.

General Business Activity Index Plunges

The general business conditions index dropped by twenty-four points to reach -14.5, signaling a notable decline in business sentiments compared to the previous months.

N

New orders fell for the third consecutive month with a six-point drop to -11.3, while shipments declined significantly by sixteen points to -6.4, indicating a continuous downward trend.

Unfilled Orders and Inventories Witness Business Activity Declines

The unfilled orders index stayed at -24.0, showcasing a substantial decline, and inventories, after a positive rise, retreated by fourteen points to -5.2, suggesting a decrease.

Employment levels experienced a modest decline with the number of employees falling by four points to -8.4. Additionally, the average workweek witnessed a slight decline at -2.4.

Despite a slight uptick in December, firms’ optimism remained subdued. The index for future business conditions rose by thirteen points to 12.1, indicating a cautious outlook for the months ahead.

Read More: French Economy Declines in December

Key Indicators Snapshot

• Prices: The prices paid index decreased by six points to 16.7, while the prices received index remained steady at 11.5.
• Employee Workweek: The index slightly decreased to -2.4, signaling a small reduction in hours worked.
• Forward-Looking Indicators: Projections suggest only modest increases in new orders, shipments, and employment over the next six months.

Conclusion

The December 2023 Empire State Manufacturing Survey indicates a significant downturn in various business indicators, reflecting cautious sentiments among New York State businesses for the foreseeable future. The findings of the December 2023 Empire State Manufacturing Survey underscore a cautious sentiment prevailing among businesses in New York State. While some indicators showed marginal improvements, the overall trend points towards a challenging landscape, with limited optimism for robust growth in the immediate future.