New York manufacturers broke out of a mold of negativity in February amid a surge of new orders. The Empire State Manufacturing Survey from the Federal Reserve Bank of New York posted widespread gains on its release date of Feb. 15 after months of decline. Its headline reading, the general business conditions index, broke into […]
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New York manufacturers broke out of a mold of negativity in February amid a surge of new orders.
The Empire State Manufacturing Survey from the Federal Reserve Bank of New York posted widespread gains on its release date of Feb. 15 after months of decline. Its headline reading, the general business conditions index, broke into positive territory for the first time since July 2012.
It leapt 17.8 points to 10. That means more survey respondents started reporting improving conditions than worsening conditions. For the month, 28.7 percent of manufacturers said conditions improved, compared to 18.7 percent that said they deteriorated.
Manufacturers raised their collective opinion of general business conditions as they experienced a surge in orders, the survey found. Its new orders index spiked 20.5 points to break out of negative territory at 13.3.
“New orders is what drove the process,” says Randall Wolken, president of the Manufacturers Association of Central New York. “And shipments are also up, which means not only are there orders, but they’re shipping them out.”
Shipments rose a month after contracting in January. The shipments index moved up 16.2 points to 13.1.
Unfilled orders changed little from last month, according to the unfilled orders index. It moved closer to zero with a 5.5-point gain to -2.
Also hovering around zero were delivery times and inventories. The delivery time index swelled 4.2 points to 2. The inventories index ascended 8.6 points to settle at zero.
Rising prices continued to be the norm in the industry. Manufacturers said they paid higher prices, according to the prices paid index, which crept up 3.7 points to 26.3 And they indicated they received higher prices, as the prices received index dipped 2.7 points to a still-positive 8.1.
Hiring took place in February, although manufacturers didn’t ask their employees to work more hours. The number of employees index shattered the zero barrier with a 12.4-point increase to 8.1. The average employee workweek inched up 1.3 points to -4.
“We’re coming through a pretty challenging time in December and January,” Wolken says. “It was nice to see an uptick and really some positives.”
Future expectations rise
Forward-looking indicators in the survey, which measure expectations for a time six months from now, moved largely in step with current indexes. The future general-business conditions index added 10.7 points to 33.1.
In February, 49.9 percent of survey respondents said they expect better business conditions in the future. Just 16.8 percent anticipated lower conditions.
Orders will rise, respondents predicted. The future new orders index gained 4 points to 29.1.
Shipments are set to follow, according to manufacturers. They drove the future shipments index up nearly 3 points to 26.8.
However, little change is likely when it comes to unfilled orders and delivery times, the survey found. The future unfilled orders index snuck up 0.9 points to 2, while the future delivery time index dipped 2 points to -2.
Inventories are also in line to hold steady. The future inventories index slid 1.1 point to zero.
Manufacturers believe price increases, on the other hand, will continue. The future prices paid index rose 5.7 points to 44.4. The future prices received index dropped 8.4 points to 13.1.
Even so, future employment indicators strengthened. The future number of employees index picked up 7.6 points to 15.2, and the future average employee workweek index took on 7.9 points to 11.1.
Also picking up were manufacturers’ plans to invest in their businesses. The future capital expenditures index flew up 9.8 points to 14.1. And the future technology spending index swelled 5.7 points to 11.1.
“It’s not a surprising report,” Wolken says. “I’m hearing a lot of small and medium-sized businesses were having good 2012s and thought 2013 would be a good year.”
Improving manufacturing conditions often force Central New York firms to hire, add production space, or purchase new technology, Wolken continues.
“Small and medium businesses in particular can’t wait,” he says. “They’ve got to make investments, and I think it bodes well for communities like ours, which has a lot of small and medium manufacturers.”
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.
Contact Seltzer at rseltzer@cnybj.com