Business conditions for New York manufacturers fell apart in August, according to a monthly survey from the Federal Reserve Bank of New York. The general business conditions index in the New York Fed’s Empire State Manufacturing Survey, which was released Aug. 15, plummeted 13.2 points to -5.9. It is the first time the index dropped […]
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Business conditions for New York manufacturers fell apart in August, according to a monthly survey from the Federal Reserve Bank of New York.
The general business conditions index in the New York Fed’s Empire State Manufacturing Survey, which was released Aug. 15, plummeted 13.2 points to -5.9. It is the first time the index dropped below zero since last October.
The negative reading comes as more manufacturers reported worsening business conditions than improving circumstances. Although nearly 22.1 percent of polled manufacturers said business conditions improved in August, 27.9 percent indicated business got worse for them. The remaining survey respondents, about 50 percent, said conditions did not change during the month.
“The August Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated over the month,” the New York Fed said in a report on the survey.
Almost all current indicators — indicators showing how conditions changed from the previous month — fell in the August survey. New orders declined, as the index measuring them slipped 2.8 points to -5.5. The shipments index retracted by 6.2 points to 4.1, showing that growth in shipments sank.
The unfilled-orders index climbed slightly, rising by about 3 points. But it remained firmly underwater at -10.6, indicating more manufacturers saw their quantity of unfilled orders dropping than rising.
Delivery times shortened, according to the delivery-time index. It moved down 5.8 points to -7.1. And inventories thinned out, with the inventories index sliding 8.4 points below its previous reading of zero.
Manufacturers reported feeling the squeeze of prices paid rising faster than prices received in August. The prices-paid index jumped 9.1 points to 16.5, even as the prices-received index edged down 1.4 points to 2.4.
Employment levels increased, but at a slower pace than in the previous month, according to the survey’s number-of-employees index. It dipped by 2.1 points to 16.5. Meanwhile, the average employee-workweek index moved up from 0 by 3.5 points, showing that workers added hours.
Future expectations
Current business-conditions indicators weren’t the only ones to fall in the survey. Its forward-looking indicators, which measure expectations for six months in the future, were also home to nearly across-the-board drops.
“Indexes for the six-month outlook were generally positive but lower than in July, indicating that respondents expected business conditions to improve little in the months ahead,” the New York Fed said in its survey report.
The future general-business conditions index turned down 5 points to 15.2, meaning manufacturers felt less optimistic than in the New York Fed’s July survey. However, hopes for future improvements still predominated in August, with 37.3 percent of manufacturers predicting better business conditions in six months compared to 22.1 percent anticipating worse conditions. The remaining 40.6 percent of survey respondents said conditions will be the same as they are today.
Survey respondents pulled back on their hopes for new orders, as the future new-orders index skidded down 11.2 points to 2.4. Expectations for shipments in six months also bogged down, with the future-shipments index descending 6.6 points to 8.2.
Unfilled orders will be less frequent in coming months, according to the future unfilled-orders index, which slipped 4.4 points to -10.6. It was joined in negative territory by the future delivery time index and the future inventories index. The future delivery-time index ticked up 1.8 points yet remained firmly below zero at -10.6. The future-inventories index followed suit, inching 0.5 points higher to -9.4.
Jumps in both prices paid and prices received are in store, according to manufacturers. The future prices-paid index deflated by 4 points but stayed positive at 31.8. The future prices-received index trimmed 1.9 points from its reading to remain above zero at 14.1.
Manufacturers expect to add employees at a slower rate in six months, as indicated by the future number-of-employees index. It fell 2.6 points to 3.5.
They anticipate a shorter workweek as well. The future average employee-workweek index declined 3.3 points to -8.2.
Capital expenditures and technology spending are still on manufacturers’ plates, albeit less so than in recent surveys. The future capital-expenditures index dropped 6.8 points to 12.9, and the future technology-spending index plunged 12.6 points to 5.9.
“When asked about negative influences on 2012 hiring and capital-spending plans, a majority of respondents cited increased uncertainty about business prospects,” the New York Fed report said.
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