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New York manufacturing conditions improve in June, survey finds

By Eric Reinhardt

Date:

Business conditions for New York manufacturers “improved modestly” in June, according to the latest Empire State Manufacturing Survey.

The Federal Reserve Bank of New York released the latest survey.

The general-business conditions index, the “most comprehensive” of the survey’s measures, rose nine points to 7.8, according to the New York Fed.

It’s good that we’ve seen a “modest” increase in the general business-conditions index, says Randall Wolken, president of the Manufacturers Association of Central New York (MACNY).

“I would’ve been concerned if we had seen multiple months of decline there,” Wolken says.

About 29 percent of manufacturers said conditions had improved over the month, while 22 percent felt conditions had worsened, the survey found.

But most other indicators in the survey fell.

The new-orders index slipped six points to -6.7, the shipments index fell 12 points to -11.8, and the unfilled-orders index declined eight points to -14.5.

The delivery-time index declined three points to -6.5. The inventories index fell three points to -11.3, extending the decline in inventories to a fourth consecutive month, the survey found.

The survey data indicates the recovery is still “slow,” according to Wolken.

“I’ll be watching the new-orders and the shipments index over the next few months, just to see what they’re going to do,” Wolken says.

He says he tends to focus on those indexes to watch over time “because that really indicates what’s going out the door.”

The prices-paid index held steady at 21, while the prices-received index rose seven points to 11.3, the survey found.

Labor-market conditions worsened, with the index for number of employees dropping to zero, indicating that employment levels were flat and the average-workweek index retreating 10 points to -11.3.

“We’ve known for some time now this is a modest, incremental recovery, and this [survey] would indicate that’s what we’re seeing,” Wolken says.

 

Looking ahead

Continuing the trend over the past few months, indexes for the six-month outlook declined, suggesting that optimism about future conditions was “weakening further” among New York’s manufacturers in June, according to the New York Fed.

The future general-business conditions index inched down to 25, the future new-orders index fell nine points to 19.8, and the future-shipments index fell five points to 20.2.

The future prices-paid index rose 16 points to 45.2, indicating that input price increases were expected to accelerate, while the future prices-received index rose three points to 17.7, according to the New York Fed.

The index for expected number of employees retreated to 1.6, and the future average-workweek index declined 11 points to -9.7. The capital-expenditures index fell “steeply,” dropping 20 points to 3.2, and the technology-spending index moved into negative territory for the first time since 2009, declining 15 points to -3.2.

Wolken also says he keeps an eye on the capital-expenditures index, but doesn’t get concerned over the data in any given month.

“When you see multiple months of a particular trend, that usually indicates where it’s going,” he says.

Some economists are projecting two to three percent growth in gross domestic product in 2013, Wolken says, and if manufacturers see the growth “then I suspect these indicators will again turn positive and stay positive.”

Some survey respondents may be responding to their own situations on new orders and shipments, Wolken adds.

What he believes gets lost in these monthly surveys is that New York manufacturers are having difficulty finding the skilled workers to necessary to fill advanced-skill positions.

Wolken describes it as “still a big gap and a big need” for those with two-year degrees and certifications that manufacturers want to add to their employee counts.

The Empire State Manufacturing Survey is distributed on the first day of each month to the same pool of about 200 manufacturing executives in New York. Typically, about 100 surveys are returned.

 

Contact Reinhardt at ereinhardt@cnybj.com

 

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