General business conditions for New York manufacturers improved in February to reach their highest point since June 2010, according to a monthly survey released Feb. 15 by the Federal Reserve Bank of New York. The February 2012 Empire State Manufacturing Survey’s general business conditions index jumped 6 points to 19.5. It has been trending up […]
General business conditions for New York manufacturers improved in February to reach their highest point since June 2010, according to a monthly survey released Feb. 15 by the Federal Reserve Bank of New York.
The February 2012 Empire State Manufacturing Survey’s general business conditions index jumped 6 points to 19.5. It has been trending up since October 2011 and is now at its highest point since June 2010, when it registered 20.3.
In the survey, 31.6 percent of manufacturers said business conditions improved from January, while 12.1 percent said conditions worsened. Another 56.3 percent of manufacturers in the state said business conditions remained the same as in January.
“I think it’s very good news,” says Randall Wolken, president of the Manufacturers Association of Central New York (MACNY). “This continues to be a positive trend.”
The Empire State Survey’s new-orders index slipped 4 points to 9.7. However, it remained in positive territory, indicating new orders increased — but the 4-point decrease shows new orders did not grow as quickly as they did last month.
Shipments were more frequent as well. February’s shipments index inched up 1.1 points to 22.8.
The inventories index dropped 11.3 points to -4.7. The negative number reflects slightly lower inventory levels among manufacturers.
Unfilled orders fell, as the unfilled-orders index slid 1.6 points to -7.1. Meanwhile, delivery times rose slightly, with the index measuring those times gaining 4.5 points to turn positive at 1.2.
Both the prices-paid index and prices-received index decreased but stayed positive, indicating manufacturers paid higher prices in February while also receiving higher prices. The prices-paid index slipped 0.5 points to 25.9, while the prices-received index fell 7.8 points to 15.3.
Manufacturing employment grew in New York State in February, according to the survey. The number-of-employees index slipped by 0.3 points to 11.8, and the average-employee workweek index added 0.5 points to 7.1.
February’s survey results are consistent with feedback Wolken is receiving from MACNY members, he says.
“We’re hearing positive news,” he says. “Obviously it depends on the company. It does depend on the sector. But from most business-to-business sectors, we’re hearing growth.”
Future expectations
New York manufacturers expressed high hopes for the coming months, according to the survey’s forward-looking indicators, which measure expectations for a period six months in the future. All future indicators hovered in positive territory.
The future general business conditions index shed 4.5 points to 50.4. But a majority of survey respondents — 57.6 percent — still anticipated better business conditions in six months. Just 7.2 percent expected worse conditions, and 35.2 percent said conditions will likely be the same.
The future new-orders index skidded down 9.1 points to 44.7, while the future-shipments index declined 3.3 points to 49.4. And the future inventories index held steady, dropping 0.4 points to 10.6.
Manufacturers predicted slightly more unfilled orders in six months, with the future unfilled orders index losing 0.8 points to 4.8. The future delivery time index also remained positive, but lost 4.2 points to settle at 2.4.
Prices paid and prices received will continue to rise, according to manufacturers’ expectations. The future prices paid index spiked 8.5 points to 62.4, and the future prices received index swelled 3.4 points to 34.1.
Manufacturers showed a willingness to make capital expenditures and spend on technology, the survey found. The future capital expenditures index bounded up 6.5 points to 31.8, while the technology spending index remained steady, dipping 1 point to 18.8.
“Investments are a big factor,” Wolken says. “When the climate starts to change in your favor and you have to make investments because orders are going up, that’s positive.”
Manufacturing employment could also increase in the next six months, according to the survey. The number of employees index climbed 0.8 points to 29.4. The average employee workweek index crept up 1.2 points to 18.8.
Plans to add employees in the future can indicate manufacturers who are finding success today, according to Wolken.
“I think employment is a lagging indicator in the future employment index,” he says. “As I look at the manufacturing sector, the first thing they look to do is make improvements through capital. When they can no longer do that, they’re hiring.”
The New York Fed polls a set pool of about 200 New York manufacturing executives for the monthly survey. About 100 executives typically respond, and the Fed seasonally adjusts data.