A negative view of business conditions persisted among New York manufacturers for a third straight month in October, according to a survey from the Federal Reserve Bank of New York. The general business conditions index in the New York Fed’s monthly Empire State Manufacturing Survey increased by 4.3 points, but still came in below zero […]
A negative view of business conditions persisted among New York manufacturers for a third straight month in October, according to a survey from the Federal Reserve Bank of New York.
The general business conditions index in the New York Fed’s monthly Empire State Manufacturing Survey increased by 4.3 points, but still came in below zero at -6.2. That negative reading means more manufacturers said business conditions worsened than said they improved in October.
The survey, issued Oct. 15, showed 24.6 percent of respondents reported improving conditions, compared to 30.8 percent who reported declining conditions. The remaining 44.6 percent of survey respondents indicated that business conditions remained the same as they were last month.
“It’s a time of uncertainty,” says Randall Wolken, president of the Manufacturers Association of Central New York. “Especially at the federal level, a lot of manufacturers and businesses are generally waiting to see the results of the election.”
The waiting game has affected manufacturing in Central New York as well, albeit to a lesser degree, Wolken adds.
“We heard that this quarter’s been a little slower than previous quarters,” Wolken says. “But at the same time, we’re not hearing a real decline. We think it’s somewhat of a holding pattern as people wait through the elections.”
New orders followed a similar path as general business conditions in October, according to the New York Fed’s new-orders index. It rose nearly 5.1 points yet couldn’t break out of negative territory, slotting in at -9. Unfilled orders took a lower road, with the index measuring them slipping by 3.4 points to -18.3.
Shipments fell, according to the shipments index, which dropped 9.2 points to -6.4. The delivery-time index slid 6.4 points to -4.3.
Manufacturers’ inventories declined slightly. The inventories index, which had been at zero, ticked down 2.2 points to -2.2
Prices paid continued to escalate, although not as quickly as before, according to the prices-paid index. It registered 17.2, down nearly 2 points from last month.
The prices that manufacturers received rose at a slower rate than in prior months. The prices-received index dipped 1 point but stayed positive with a reading of 4.3.
Hiring and the average employee workweek are declining, the survey found. The number-of-employees index plunged 5.3 points to settle below zero at -1.1, while the average employee-workweek index skidded 3.2 points to -4.3.
The last time the Empire State Manufacturing Survey’s general business conditions index was negative for at least three straight months was the June to October 2011 period, when it was below zero for five consecutive months.
Future expectations
Manufacturers held out hope for a better tomorrow, although they tamped down their optimism compared to previous months. Nearly all of the New York Fed’s forward-looking indicators, which measure expectations for a time six months from now, moved down in October.
The future general business conditions index plunged 7.8 points to 19.4. Slightly more than 38 percent of survey respondents anticipated better conditions in six months, while about 18.6 percent predicted worse conditions. The other 43.3 percent of respondents expected no change.
Also edging down was the future new-orders index, which decreased by about 2 points to 15.1. The future unfilled-orders index moved in the opposite direction with a 7.4-point rise. It still checked in below zero at -7.5.
Manufacturers predicted higher shipments in the future despite downward motion in the future shipments index. It inched down nearly a point but stayed positive at 11.8.
Delivery times should be considerably shorter in six months, however, as the future delivery-time index skidded 3.3 points to -10.8. And the future inventories index remained essentially unchanged at -4.3, indicating manufacturers expect inventories to decrease.
Prices are set to continue to increase, according to manufacturers, who pushed the future prices-paid index up 3.7 points to 44.1.
They also drove the future prices-received index up 1.3 points to 24.7.
Future employment indicators took a hit in October. The future number-of-employees index dove 8.5 points to 0, meaning manufacturers don’t expect to change their employee levels in six months. But the future average employee-workweek index predicted fewer hours on the job for current workers by plummeting almost 14 points to -11.8.
Manufacturers haven’t given up plans to invest in their businesses, though. The future capital-expenditures index remained above zero at 6.5 in spite of a 6.3-point drop. And the future technology-spending index remained virtually unchanged. It posted a gain of less than 0.1 point to notch a bit above 7.5.
“That is a good sign, and I would be very concerned if that number would start to fall,” Wolken says. “That would mean people would have situations where they’re maybe short on cash. The ability for manufacturers to meet demand depends on making investments in capital.”
The New York Fed polls a set pool of about 200 manufacturing executives in the state for its monthly survey, and about 100 executives typically respond. The Fed seasonally adjusts data.
Contact Seltzer at rseltzer@cnybj.com