(Bloomberg) -- New York state factory activity strengthened this month, though a sharp deterioration in firms’ views about the outlook casts doubt on the sustainability of manufacturing growth. 

The Federal Reserve Bank of New York’s general business conditions index for November increased nearly 14 points to a seven-month high of 9.1. A reading above zero indicates expansion, and the latest figure exceeded all estimates in a Bloomberg survey of economists. 

The pickup in the gauge, which has been prone to large month-to-month swings for more than two years, was due to stronger growth in shipments. New orders, however, contracted for a second month in a sign of wavering demand.

At the same time, the index of expected business conditions in the next six months plunged 24 points to minus 0.9, the first contraction in a year. Forward-looking measures of prices paid and received both climbed, with the latter hitting its highest point since February. 

While US manufacturers have been largely plodding along in the face of fragile export markets, uneven capital goods demand and the fallout from higher borrowing costs, the forward-looking data suggest producers are growing increasingly concerned about their ability to weather those headwinds.

Wednesday’s report also showed New York producers reduced headcount and hours worked in November as unfilled orders shrank further. 

--With assistance from Kristy Scheuble.

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