A report released by the Federal Reserve Bank of New York on Friday showed a notable slowdown in the pace of growth in regional manufacturing activity in the month of October.
The New York Fed said its general business conditions index tumbled to 19.8 in October from 34.3 in September, although a positive reading still indicates growth. Economists had expected the index to pull back to 27.0.
The steep drop by headline index came as the new orders index slumped to 24.3 in October from 33.7 in September, while the shipments index plunged to 8.9 from 26.9.
The report said the number of employees also fell to 17.1 in October from 20.5 in September, but the positive reading still indicates job growth.
Meanwhile, the New York Fed said the delivery times index inched up to a new record high of 38.0 in October from 36.5 in September.
The prices paid index also rose to 78.7 in October from 75.7 in September, while the prices received index slid to 43.5 from 47.8.
Looking ahead, the New York Fed said firms were still very optimistic that conditions would improve over the next six months. The index for future business conditions increased to 52.0 in October from 48.4 in September.
“Supply, not demand, is manufacturing’s major current problem,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics. “There’s no quick fix to the multiple, simultaneous issues that are presently restraining growth.”
“Our supply chain tracker signals that stress is still rising, and we don’t expect these challenges to meaningfully dissipate until well into 2022,” he added. “In the meantime, factories will do their best to keep up with robust demand.”