The Federal Reserve Bank of New York reported Oct. 15 that its Empire State Manufacturing Survey general business-conditions index plummeted 21 points to 6.2 in October. That missed analysts’ average estimate of a reading of 20.5 this month, according to Yahoo Finance data. The index decline signals that the pace of growth “slowed significantly” from […]
The Federal Reserve Bank of New York reported Oct. 15 that its Empire State Manufacturing Survey general business-conditions index plummeted 21 points to 6.2 in October.
That missed analysts’ average estimate of a reading of 20.5 this month, according to Yahoo Finance data.
The index decline signals that the pace of growth “slowed significantly” from a strong September, according to a New York Fed news release posted on its website.
But since the reading remained above zero, it indicates that the manufacturing sector in New York is still growing in October.
The index is still in “positive territory,” says Randall Wolken, president of the Manufacturers Association of Central New York.
“Overall, I’m satisfied with this month’s report. I’d like to continue to see more rapid growth … There’s nothing that would suggest at this point that businesses aren’t continuing to improve,” he says.
When the general business-conditions index falls below 0 on a consistent basis, Wolken adds, then manufacturers have “some challenges” and that hasn’t happened recently.
The general business-conditions index had risen nearly 13 points to 27.5 in September, its highest level since late 2009. Previous readings on the same index include 14.7 in August and 25.9 in July, according to the New York Fed.
A drop in the share of manufacturing respondents reporting that business conditions had improved relative to the preceding month drove the decline in the index in October. The share fell from 46 percent in September to 25 percent in October, while the share of respondents reporting worsening conditions was little changed at 19 percent.
The October survey also found the new-orders index dropped 19 points to -1.7, evidence of a slight decrease in orders.
Like the drop in the general business-conditions index, this decline reflected a “large” drop in those reporting an increase.
The shipments index tumbled 26 points to 1.1, indicating that orders were “flat” on the heels of a sharp increase last month, the New York Fed said.
“Obviously, we’d like to have seen new orders and shipments do better,” says Wolken.
The unfilled-orders index rose slightly but remained negative at -4.5. The delivery-time index was “little changed” at -5.7. The inventories index, which was up 10 points to 2.3, indicated that inventory had increased “slightly” after declining the prior three months.
Both price indexes declined, indicating a “slower” pace of growth in input and selling prices alike.
The prices-paid index fell 13 points to 11.4, its lowest level in more than two years, and the prices-received index fell 11 points to 6.8.
Employment indexes pointed to a “modest” increase in employment levels and “little change” in hours worked.
Wolken was “encouraged” by the increase in the employment indexes.
“Employment is usually a lagging indicator, which usually means people wait until they have significant opportunity before they hire,” he says.
The index for number of employees climbed 7 points to 10.2, and the average-workweek index dropped 4 points to -1.1.
Most of the indexes assessing the future outlook were down from last month. Nevertheless, they remained “fairly high by historical standards,” and conveyed an expectation that activity would continue to grow in the months ahead.
The index for future general-business conditions fell 5 points to 41.7.
“As long as people continue to remain optimistic as they look to their future … those are positive signs and those tend to drive investments,” Wolken says.
The future new-orders index fell 3 points to 42.3, and the future shipments index declined 5 points to 42.5.
The index for expected number of employees dropped to 12.5, and the future average-workweek index fell below zero.
The capital-expenditures index climbed 9 points to 21.6, its highest level in several months, and the technology-spending index rose to 15.9.
The New York Fed distributes the Empire State Manufacturing Survey on the first day of each month to the same pool of about 200 manufacturing executives in New York. On average, about 100 executives return responses.
Contact Reinhardt at ereinhardt@cnybj.com