Empire State manufacturing index edges up in March

The Federal Reserve Bank of New York on March 17 reported that its Empire State Manufacturing Survey general business-conditions index rose to 5.6 in March from 4.5 in February.

Even though the index was “little changed” this month, the survey indicates business conditions “continued to improve” in March, according to a news release from the New York Fed.

The survey provides a monthly snapshot of trends in the sector, says Randall (Randy) Wolken, president of the Manufacturers Association of Central New York (MACNY).

“Even incremental improvement … points in the right direction,” Wolken says.

About 30 percent of respondents reported that conditions had improved over the month, while 25 percent said that conditions had worsened, the New York Fed said in the news release.

The new-orders index climbed three points to 3.1, indicating that orders were “slightly higher,” while the shipments index inched up to 4.0, indicating a small rise in shipments.

“Those [indexes]… indicate current activity,” Wolken says.

The survey also found that unfilled-orders index fell further into negative territory, declining 10 points to minus 16.5.

The delivery-time index dropped to -3.5, indicating somewhat shorter delivery times, and the inventories index climbed twelve points to 7.1—a sign that inventory levels had risen over the month, according to the New York Fed.

Price indexes headed lower in March, and pointed to a slowing in the pace of both input price increases and selling price increases.

The prices-paid index fell four points to 21.2, while the prices-received index declined 13 points to 2.4, suggesting only a “slight increase” in selling prices, according to the New York Fed.

Labor-market conditions continued to improve.

The employment index fell five points but, at 5.9, indicated a small increase in employment levels.

The average-workweek index, holding steady at 4.7, pointed to a minimal increase in hours worked.

Indexes for the six-month outlook continued to convey a “solid” degree of optimism about future-business conditions, though to a “somewhat lesser degree” than last month, according to the New York Fed.

Besides examining the survey for trends over time, Wolken also looks to the index number to answer a key question on the outlook for manufacturing conditions, he says.

“Do they [manufacturers] continue to remain optimistic in terms of growth and opportunity?,” Wolken says.

The index for expected general-business conditions fell six points to 33.2, and the index for future new orders dropped to 36.0, down nine points from last month’s two-year high.

Indexes for future price increases inched higher.

The index for expected number of employees, though lower than last month, remained “firmly” in positive territory, the New York Fed said.

After falling sharply last month, the capital-expenditures index rose 14 points to 16.5, and the technology-spending index increased to 7.1.

“We’re probably not at the point where we’re going to see significant job growth, but the capital investments usually lead to job growth,” Wolken says.

Manufacturing is a “capital intensive” sector, which requires firms to focus on future planning, whether it’s six months, a year, two years, or more, he adds

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 New York.

On average, about 100 executives return responses, it says.

Contact Reinhardt at ereinhardt@cnybj.com