NY manufacturing conditions improve for a third month

Conditions for New York manufacturers improved “modestly” for a third consecutive month in July.

That’s according to the August 2013 Empire State Manufacturing Survey that the Federal Reserve Bank of New York released Aug. 15.

The survey’s benchmark indicator, the general business-conditions index, was “little changed” from last month at 8.2, according to the New York Fed.

Trends are more important than one-month snapshots, says Randall Wolken, president of the Manufacturers Association of Central New York (MACNY).

“A third consecutive month where you see modest improvement is positive … trending in the right direction,” Wolken says.

The new-orders index slipped four points to 0.3, and the shipments index fell seven points to 1.5, suggesting that both orders and shipments were “flat,” the New York Fed said in a news release.

The survey also found the prices-paid index rose slightly to 20.5, and the prices-received index climbed three points to 3.6.

Labor-market conditions improved, according to the New York Fed.

The index for number of employees climbed eight points to 10.8, and the average-workweek index rose 12 points to 4.8.

Both of these indexes reached their highest levels in a year, the New York Fed said.

Wolken is also encouraged to see a rise in the index for number of employees and an increase for the average workweek, he says.

Companies don’t increase employee-work hours or their employee counts unless they project revenue growth, Wolken says.

He maintains that those components correspond with the six-month outlook, which he views as “really important because that usually indicates what their future investments are going to be,” he says.

Besides the monthly gauge on employees and average workweek, Wolken also pays close attention to the index measuring the six-month outlook because it answers an ongoing question: “Do they [manufacturers] continue to remain optimistic for the future?,” he asks.

Indexes for the six-month outlook generally pointed to “strong” optimism about future business activity. The future general business conditions index rose five points to 37.4, its highest level in more than a year.

Wolken also examines the indexes for orders and shipments, but those can be “cyclical” or “periodic,” depending on a given company and the time of year, he adds.

In response to a series of supplementary questions, manufacturers predicted that overall sales would be 5 percent higher in 2013 than in 2012.

“It’s not a gigantic swing, but they are up,” Wolken says.

New York manufacturers expected employment levels and capital spending “to be little changed” from last year, according to the New York Fed.

The New York Fed distributes the 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.

Manufacturing-jobs data

Wolken also reacted to figures from the New York State Department of Labor released Aug. 15 that indicated the manufacturing sector lost 15,800 jobs statewide between July 2012 and this past July to lead the state in sector-job losses.

That aggregate number is hard to analyze, Wolken says, because “it includes all the manufacturing sectors,” some of which are “thriving” while others are “challenged.”

Wolken also notes decreases in employee counts may be due to “productivity improvements.”

“That is, you may have less staff but you pay them better and … have more capital investment,” he adds.

Wolken still views manufacturing as “the most productive sector in the economy.”

He also notes that exports in New York were up during the first half of the 2013, and data from the federal government supports that belief.

The International Trade Administration (ITA) on Aug. 8 announced that new data indicates New York merchandise exports increased 7 percent in the first half of 2013 compared to the same time period a year ago, growing from $42.9 billion to $45.7 billion.

The $45.7 billion figure represents a “record high export level” for New York, according to the ITA, which is part of the U.S. Department of Commerce.

Contact Reinhardt at ereinhardt@cnybj.com