New York manufacturing index tumbles in August

The Empire State Manufacturing survey general business-conditions index plunged 19 points to -14.9 in August, its lowest level since 2009. 

The index reading indicates business activity declined for New York manufacturers in August, the Federal Reserve Bank of New York said in its survey report posted on its website on Aug. 17. A reading above zero indicates expansion, and a reading below zero indicates contraction.

The index level had been “hovering around zero since April,” the New York Fed said.

The result was far worse than economists had expected. Economists that Reuters polled had anticipated that the New York manufacturing index would rise to 5.0 in August, according to an article on the survey posted at the Reuters website.

The survey found 19 percent of respondents reported that conditions had improved over the month, while 34 percent reported that conditions had worsened. 

The manufacturing community is “cautious” about what it sees now, says Randall Wolken, president of the Manufacturers Association of Central New York (MACNY).

“Whenever the index drops this much in one month, we want to watch it from month to month at this point and just see if it continues or [if] it springs back up because we’ve had drops and it immediately will come back,” says Wolken.

He spoke with CNYBJ on Aug. 18.

Despite the drop in the general business-conditions index, the future outlook among survey respondents is “positive,” he adds.

“… which would indicate that people do expect it to bounce back or see a future increase in this index.”

Inside the report

An Associated Press article on the latest survey indicated the state’s activity was “pulled down by sharp declines in new orders and shipments.”

When asked about that analysis, Wolken called it “a correct assessment.”

The new-orders index fell 12 points to -15.7, its lowest level in several years, indicating that orders were down “appreciably,” the New York Fed said. 

The shipments index plunged 22 points to -13.8, pointing to a “substantial” decline in shipments. 

The unfilled-orders index edged up three points to -4.5. 

The delivery-time index fell to -4.6, indicating slightly shorter delivery times, and the inventories index fell 9 points to -17.3, suggesting that inventory levels were “significantly” lower than last month.

Price increases remained “subdued.” 

The prices-paid index was “little changed” at 7.3, continuing the pattern of “modest” input price increases seen in recent months. 

The prices-received index fell to 0.9, indicating that selling prices were “flat.” 

Labor-market indicators pointed to “little change” in employment and hours worked. The index for number of employees edged down 1 point to 1.8, and the average-workweek index fell to -1.8.

While indexes for future activity fell short of the higher levels recorded throughout 2014, they still showed a “fair degree of optimism” about the six-month outlook, the New York Fed said. 

The index for future business activity climbed 7 points to 33.6. 

The index for future new orders dipped to 29.4, while the index for future shipments rose 8 points to 33.0. 

Indexes for future prices paid and received advanced. The index for future number of employees declined for a fifth consecutive month, reaching 3.6, representing a sign that respondents expect “little change” in employment levels in the months ahead. 

The capital-expenditures index fell 4 points to 17.3, and the technology-spending index rose 3 points to 13.6.

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 the state. On average, about 100 executives return responses.