New York’s manufacturing firms said the difficult business conditions they have faced in recent months continued in January. But the picture looks brighter here in Central New York and going forward. The general business conditions index in the Empire State Manufacturing Survey from the Federal Reserve Bank of New York dropped half a point to […]
New York’s manufacturing firms said the difficult business conditions they have faced in recent months continued in January. But the picture looks brighter here in Central New York and going forward.
The general business conditions index in the Empire State Manufacturing Survey from the Federal Reserve Bank of New York dropped half a point to -7.8. The report’s negative reading, which was issued Jan. 15, means more manufacturers reported declining conditions than improvement.
Although 25.9 percent of surveyed firms said conditions improved in January, they were outweighed by 33.7 percent citing declines from the previous month. The other 40.4 percent of manufacturers responding to the New York Fed’s monthly survey reported no change.
Most other current indicators languished below zero, reflecting manufacturers’ ongoing struggles. The month’s steepest drop came in the shipments index, which skidded 15 points to -3.1.
Central New York’s manufacturers aren’t quite as down on local conditions as the New York Fed’s survey would seem to indicate, according to Robert Trachtenberg, president and CEO of the Central New York Technology Development Organization, Inc. (TDO). Many of the businesses that the TDO works with are anticipating an increase in exports, he says.
“I think this survey’s a little more negative than I see,” Trachtenberg says. “I see much more positive thinking out there than the survey would indicate. I think a lot of people will look back on 2013 as being a really good year.”
In the Empire State Survey, the new-orders index slipped 3.7 points to -7.2. Manufacturers indicated they had fewer unfilled orders, reflected by the unfilled-orders index dipping 1.1 points to -7.5.
Delivery times edged down slightly, as indicated by the delivery-times index posting a reading of -2.2. That was unchanged from December.
Manufacturers continued to cut inventories, but at a slightly slower rate than in recent months. The inventories index stayed below zero at -8.6 despite rising 3.2 points in January.
Prices, meanwhile, were on the uptick. Manufacturers paid higher prices, with the prices-paid index increasing 6.5 points to 22.6. They also received higher prices for their goods, according to the prices-received index, which jumped 9.7 points to 10.8.
Employment indicators remained negative, despite manufacturers tempering their plans to reduce employment levels and trim employees’ hours. The number-of-employees index rose 5.4 points to -4.3, and the average employee-workweek index climbed 5.4 points to -5.4.
Stronger future expectations
The state’s manufacturers assembled a stronger set of hopes for the future. The Empire State Manufacturing Survey’s forward-looking indicators, which measure expectations for a time six months into the future, all avoided dipping below zero.
They did so as the future general business conditions index gained 4.5 points to 22.4. In January, 40.8 percent of manufacturers predicted better conditions in six months, compared to 18.4 percent anticipating worse conditions and 40.8 percent foreseeing no change.
New orders will jump, according to the future new-orders index. It swelled 7.9 points to 25.1. That rising tide is in line to lift shipments, if the future shipments index proves to be accurate. It moved up 1.4 points to 23.9.
The future unfilled-orders index slid 2.2 points to 1.1. The future delivery-time index didn’t change, holding steady at zero. And the future inventories index moved above zero, adding 4.3 points to notch 1.1.
“What you’re finding is that while a lot of companies are kind of coasting at the sales level they’re at right now, they’re anticipating more sales and they’re anticipating growth,” Trachtenberg says. “They’re reading about the fact that a lot of companies are starting to bring jobs that had been overseas back.”
Price increases are still on the horizon, the survey found. The future prices-paid index tallied 38.7 despite a 12.9-point decrease. On a similar note, the future prices-received index edged down 4.3 points to 21.5.
Manufacturers’ plans for increasing capital expenditures flattened. The future capital-expenditures index lost 8.6 points, moving down to 4.3. The future technology-spending index was steadier, picking up 1.1 points to 5.4.
Also flattening were employment indicators for six months from now. The future average employee-workweek index dropped 2.2 points to 3.2. The future number-of-employees index slid 3.2 points to 7.5.
“They’re looking for employees, and they just can’t seem to find the skills that match their needs,” Trachtenberg says. “That’s not only a local problem. We’re seeing that nationally.”
Survey respondents reserved more optimism for a 12-month time frame. The New York Fed sent manufacturers a series of supplemental questions in January to ask them about their staffing plans over a one-year period.
More than a quarter of respondents, 27.2 percent, said they expected to increase their number of employees, while 18.5 percent predicted staffing decreases. Those results were down from January of 2012, the last time the Fed asked this set of supplemental questions. At that time, 50.5 percent of manufacturers anticipated hiring and 8.8 percent thought they would cut staff.
The New York Fed polls a set pool of about 200 manufacturing executives in the state for its monthly survey. About 100 executives typically respond.
The Fed seasonally adjusts data, and January’s results take an annual benchmark revision into account.
Contact Seltzer at rseltzer@cnybj.com