New York manufacturing activity rises in July

Manufacturing activity in New York picked up some speed in July after a deceleration in the previous month, according to the Federal Reserve Bank of New York’s Empire State Manufacturing Survey.

The general business conditions index in the survey, which was released July 16, jumped 5.1 points to 7.4. That marked a reversal in course from June, when the index plunged 14.8 points.

In July, 32.1 percent of survey respondents reported improving business conditions, while 24.8 percent said conditions worsened. The other 43.1 percent indicated that conditions stayed the same as last month.

The rest of the Empire State survey’s current indicators were mixed. The new-orders index, which measures the number of new orders that manufacturers received, tumbled into negative territory by declining 4.9 points to -2.7. It is the first time that index has been negative since November 2011.

Yet a one-month drop in the new-orders index is not alarming, according to Randall Wolken, president of the Manufacturers Association of Central New York.

“It just slipped barely into negative territory, but I’m not sure it’s going to stay there,” he says. “If the other indicators were all declining, that would be a concern. But you still have shipments increasing and some good news in pricing.”

Shipments were on the rise, as the survey’s shipments index rose 5.5 points to 10.3.

Inflation in the prices that manufacturers paid slowed in July, while the prices they received increased, according to the survey. Its prices-paid index dipped 12.2 points to 7.4, and its prices received index increased 2.7 points to 3.7.

“It’s the lowest level since 2009 for prices paid,” Wolken says. “Manufacturers are getting a bit of a breather for input prices.”

At the same time, unfilled orders declined, according to the unfilled-orders index, which moved down 8.4 points to -13.6.

Delivery times also decreased, with the index measuring them slipping by 1.2 points to -1.2. The inventories index, meanwhile, showed inventories holding steady. It registered 0, up 8.3 points from June.

Manufacturers added employees without cutting back on workers’ hours in July, the New York Fed found. The number of employees index registered 18.5, up 6.2 points from last month. The average employee- workweek index notched 0, which was a decline of 3.1. Still, it showed the length of the average workweek was essentially unchanged from June.

Future expectations

The survey’s forward-looking indicators, which measure expectations for a time six months in the future, showed manufacturers continuing to harbor a positive outlook, according to Wolken.

“I think there are still some anxieties out there,” he says. “It’s an election year. There are some uncertainties about Europe — those things probably cause people to be less optimistic. Despite all of that, they remain overall optimistic.”

The future general business conditions index inched down 2.9 points to 20.2. It has been sliding steadily since January.

However, the index remains firmly entrenched in positive territory. In July, 37.5 percent of respondents predicted better conditions in six months, compared to 17.3 percent who anticipated worse conditions. Remaining respondents predicted conditions will remain the same.

Among the other forward-looking indicators, the future new-orders index edged down 1.9 points to 13.6. The future shipments index ticked up 2.4 points to 14.8.

Manufacturers anticipated a lower level of unfilled orders in six months. The future unfilled-orders index climbed 2.1 points in July but did not move out of negative territory, checking in at -6.2.

Delivery times will be lower, according to the survey’s future delivery-time index. It plummeted 11.3 points to -12.4. And the future inventories index stayed negative despite increasing by 5.6 points. It registered -9.9.

Firms expect to pay and charge higher prices, the survey found. The future prices-paid index rose 1.8 points to 35.8, and the future prices-received index eased by 1.5 points to 16.1.

The future number-of-employees index plunged 10.3 points to 6.2. The future average employee-workweek index turned negative, falling 7 points to -4.9.

Even so, many manufacturers remained committed to capital expenditures and technology spending. The future capital-expenditures index ticked down 1.9 points to 19.8, and the future technology-spending index added 6.2 points to 18.5.

The New York Fed polls a set pool of about 200 manufacturing executives in the state for its monthly survey. About 100 executives typically respond, and the Fed seasonally adjusts data.