Growth for New York’s manufacturers downshifted in June, according to the latest Empire State Manufacturing Survey from the Federal Reserve Bank of New York. The general business conditions index in the survey, which was released June 15, plummeted 14.8 points to 2.3. The descent brought the index to its lowest reading since last November, when […]
Growth for New York’s manufacturers downshifted in June, according to the latest Empire State Manufacturing Survey from the Federal Reserve Bank of New York.
The general business conditions index in the survey, which was released June 15, plummeted 14.8 points to 2.3. The descent brought the index to its lowest reading since last November, when it barely broke above 0 and registered less than 1 point.
In June, 30.6 percent of survey respondents reported improving business conditions. Another 28.3 percent said conditions worsened, and 41 percent indicated they remained the same as last month.
“It’s kind of a middling report this time,” says Randall Wolken, president of the Manufacturers Association of Central New York. “We prefer to see expanded activity, but the index is still reading positive, which I think is a good sign.”
Manufacturers are concerned about the continuing debt crisis in Europe, according to Wolken. Some are also worried about federal defense spending cuts that are looming next year unless Congress acts, he adds.
“There’s some general uncertainty,” he says. “And that tends to tamper down the indexes.”
Most of the manufacturing survey’s other current indexes fell in June. The new-orders index slipped 6.1 points to 2.2, and the shipments index sank 19.3 points to 4.8.
The number of unfilled orders continued to drop, with the unfilled orders index losing a third of a point to -5.2. Delivery times were unchanged from last month at 0.
Manufacturers drew down inventories in June, according to the inventories index, which skidded 13.1 points to -8.3.
The prices manufacturers paid proved to be somewhat of a silver lining amid the nearly across-the-board index declines. The prices-paid index was cut nearly in half in June, spiraling down 17.8 points to 19.6. That indicated slowing inflation in the prices manufacturers paid for raw materials.
However, inflation in the prices manufacturers received also lessened. The prices-received index declined by 11 points to 1.
Manufacturers said they were taking on new employees, but not as quickly as last month. June’s number-of-employees index decreased 8.1 points to 12.4. And the average employee-workweek index plunged nearly 9 points to 3.1.
Future expectations
Prospects for the future also took a hit in June, according to the survey’s forward-looking indicators, which measure expectations for a time six months from now. Still, manufacturers were more bullish about the future than they were about current conditions.
The future general business conditions index slid 6.1 points to 23.1. June marked its fifth straight month of decline.
Yet more than twice as many survey respondents thought conditions would be better in six months than believed they would be worse. Just over 39.5 percent predicted better conditions, while 16.4 percent said conditions will be worse. The remaining 44.1 percent of those surveyed anticipated that conditions would be the same.
The future new-orders index fell 14.7 points to 15.5, meaning manufacturers still see increasing new orders on the horizon, despite slashing their optimism level. Following suit was the future shipments index, which plunged 12.9 points to 12.4.
Unfilled orders will decline, manufacturers predicted. The future unfilled-orders index slipped to -8.25, down from 0 last month. Delivery times are also set to fall, according to manufacturers, who drove down the future delivery-time index by 3.4 points to -1.
Future inventories will be smaller, according to the future inventories index. It slipped 4.6 points to -15.5.
Manufacturers continued to brace for paying higher prices, although they drew back on their predicted rate of increase. The future prices-paid index dropped 23.8 points to 34. The future prices-received index fell by less, moving down 5.4 points to 17.5.
Survey respondents plan to hire more while slowing growth in the hours their employees work. The future number-of-employees index rose 4.4 points to 16.5, and the future average employee-workweek index slipped 6.4 points to 2.1.
Both the future capital expenditures and future technology spending indexes increased slightly. The future capital-expenditures index climbed 2.4 points to 21.7, while the future technology-spending index inched up 0.3 points to 12.4.
“Capital spending plans actually remained quite strong,” Wolken says. “That’s good news. That’s one of the best indicators for the future.”
The New York Fed polls a set pool of about 200 New York manufacturing executives for the monthly survey. About 100 executives typically respond, and the Fed seasonally adjusts data.