Respondents to the monthly Empire State Manufacturing Survey indicated unexpected contraction in the manufacturing sector with the general-business conditions index plunging 23 points to -3.9 in December.

This breaks a run of several strong months, as the index had climbed 8 points to 18.7 in November, its fourth positive reading in the past five months and highest in a year.

Based on firms responding to the survey, the December reading indicates business activity “declined slightly” in New York state, the Federal Reserve Bank of New York said in its Dec. 15 report. The consensus expectations of analysts was a December index number of 10.0, according to Seeking Alpha.

A negative reading on the index indicates a decline in the sector, while a positive index number points to expansion or growth in manufacturing activity.

The December survey found new orders held steady while shipments decreased modestly, the New York Fed said. Delivery times quickened, unfilled orders declined, and supply availability worsened.

However, going forward, New York manufacturing firms grew “increasingly optimistic” and expect conditions to improve in the months ahead.

Survey details

New orders held steady, with about one-third of firms reporting an increase and about one-third reporting a decrease, and shipments were modestly lower, with the index dropping 23 points to -5.7, the New York Fed said.

The inventories index came in at 4.0, pointing to a small increase in inventories. The delivery-times index fell below zero to -5.9, and the unfilled-orders index decreased to -14.9, its lowest level since January 2024, indicating quicker delivery times and fewer unfilled orders.

The supply-availability index edged up but remained negative at -6.9, suggesting worsening supply availability.

The index for number of employees ticked up to 7.3, its sixth positive reading in seven months, while the average-workweek index edged down to 3.5, suggesting a modest increase in employment levels and a small increase in hours worked.

Both price indexes remained elevated but declined for a second straight month: the prices-paid index dropped 11 points to 37.6 — its lowest level since January — and the prices-received index dipped 4 points to 19.8.

Optimism about the future

The index for future business conditions soared 17 points to 35.7, its highest level since January, suggesting firms have become more optimistic that conditions will improve over the next six months. The indexes for future new orders and shipments both reached their highest levels of 2025. Supply availability is expected to be little changed.

Firms continue to anticipate elevated price increases. Inventories are expected to continue to expand. The capital-expenditures index came in at 6.9, pointing to a small increase in capital-spending plans, the New York Fed said.

The New York Fed distributes the Empire State Manufacturing Survey on the first day of each month to the same pool of about 200 manufacturing executives in New York. On average, about 100 executives return responses.