New York manufacturing index bounces back in July

Manufacturing activity in the Empire State improved this month, as a key industry benchmark rebounded into positive territory. 

The Empire State Manufacturing Survey general business-conditions index rose nearly 6 points to 3.9 in July from -2.0 in June, the Federal Reserve Bank of New York reported July 15. That beat economists’ expectations of a reading of 3.0, according to Reuters. A reading above zero indicates expansion.

The index has moved in a “see-saw pattern” around zero for the past four months, indicating that business activity “remains subdued,” the New York Fed said in a news release.

The latest survey found 31 percent of respondents reported that conditions had improved, while 27 percent said that conditions had worsened.

U.S. manufacturers in general are being hurt by a strong U.S. dollar and weak growth overseas, while lower oil prices both help and harm.

Randall Wolken, president of the Manufacturers Association of Central New York, says those are factors that are also “definitely impacting” manufacturing in this state and region.

He contends the U.S. economy remains “one of the strongest in the world” because it generates “modest” growth and opportunity, while Europe “struggles” with Eurozone questions.

The Chinese growth rate is still “modestly good,” but not at levels where it used to be, he contends. U.S. manufacturers are becoming more “cost competitive.” 

The oil and natural gas price situation “cuts both ways,” says Wolken. 

They keep the U.S. “very competitive” with energy costs that are lower than other parts of the world, he says. 

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At the same time, those energy growth sectors, which “really took off” with investments in natural gas and hydraulic fracturing, are more “subdued” because the pricing has “come down,” says Wolken. 

Inside the report

The new-orders index remained negative and, at -3.5, indicated a “small decline” in orders for a second consecutive month, according to the New York Fed. 

The shipments index came in at 7.9, pointing to a “modest increase” in shipments. 

The unfilled-orders index retreated 3 points to -7.5, signaling a decline in unfilled orders. 

The delivery-time index came in at zero, indicating that delivery times were unchanged, and the inventories index fell 10 points to -8.5, a sign that inventory levels dropped.

Price increases remained modest, according to the New York Fed. 

The prices-paid index fell to 7.5, its lowest level in three years, indicating only a “modest” increase in input prices. 

The prices-received index rose 4 points to 5.3. 

Labor-market conditions pointed to a small increase in employment and hours worked. 

The index for number of employees fell 5 points to 3.2, and the average-workweek index was little changed at 4.3.

Future activity

Many of the indexes for future activity inched higher, but in line with the trend over the past several months. They also remained “subdued” compared with the levels recorded throughout 2014. 

The index for future-business activity edged up a point to 27.0. 

The index for future new orders increased 6 points to 32.2, and the index for future shipments rose 3 points to 25.4. 

Indexes for future-prices paid and received were “little changed.” 

The index for future employment declined for a fourth consecutive month to 9.6, but it still suggested that “manufacturers expected employment levels to rise,” the New York Fed said. 

The capital-expenditures index climbed 10 points to 21.3, and the technology-spending index moved up to 10.6.