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N.Y. manufacturers’ business conditions improve again in January

By Journal Staff


New York manufacturers reported improving business conditions in January, including increasing orders and higher selling prices, according to a survey from the Federal Reserve Bank of New York.

The January 2012 Empire State Manufacturing Survey’s general business conditions index rose 5.3 points to 13.5. That beat market expectations of 10 for the index, according to Yahoo Finance data. The index, which was 8.2 in December, has been trending up since October 2011.

The New York Fed recalibrated historical data for this month’s survey as part of an annual benchmark revision. Therefore, the current survey’s measure of last month’s general business conditions index — 8.2 — was down from the 9.5 first reported in December.

In January, 35.2 percent of survey respondents reported stronger business conditions and 21.7 percent said conditions weakened. The remaining 43.1 percent of manufacturers indicated conditions stayed the same, according to the survey, which the New York Fed released Jan. 17.

The survey’s new-orders index gained 7.7 points to 13.7, reflecting a rise in the number of orders in January. The shipments index inched up 1.6 points to 21.7, illustrating a small boost in shipments.

“All these things are positive,” says Randall Wolken, president of the Manufacturers Association of Central New York. “We’re seeing incremental growth and we’re seeing a betterment of business conditions.”

Manufacturers experienced a significant increase in selling prices, according to the New York Fed. The prices-received index bounded up 19.6 points to 23.1.

Survey data indicates prices paid did not rise as sharply in January as selling prices. The prices-paid index edged up by about 2 points to 26.4.

Those results are encouraging for manufacturers, Wolken says.

“It would generally indicate profitability and therefore investment and growth,” he says.

The unfilled-orders index rose by 9.6 points to -5.5. It had been -15.1 in December.

Inventories also climbed, as the inventories index moved up 10.1 points. It was 6.6 in January, up from negative territory in December at -3.5.

Employment indicators improved, with the number of employees index swelling 9.8 points to 12.1. And the average employee-workweek index rose from below zero. It added 8.9 points to 6.6, from -2.3 last month.

“When you’re seeing manufacturers adding employees, it is indicating in New York State that [manufacturing] should continue to be a growth sector at least incrementally in the coming year,” Wolken says. “Which speaks well for the economy.”


Future expectations

The survey’s forward-looking indicators, which measure expectations for a period six months into the future, remained positive. The future general business conditions index stepped up 9.3 points to 54.9.

“People are projecting a good year in 2012,” Wolken says. “Some of them had good 2011s, some of them had OK 2011s. But we’re hearing general optimism for 2012 as well.”

The future new-orders index inched down 0.8 points to 53.9. The future-shipments index edged up 1.6 points to 52.8, and the future unfilled-orders index fell nearly 2.7 points to 5.5.

 Manufacturers expect inventories to rise slightly in six months. The future-inventories index increased 1.7 points to 11. 

The future prices paid and future prices-received indexes decreased from December, but still remained relatively high, according to the New York Fed. The future prices-paid index lost 3.1 points but still slotted in at 53.9. The future prices-received index dipped 5.3 points to 30.8.

Survey respondents indicated they will likely hire in the future. The future number of employees index rose 4.2 points to 28.6. Meanwhile, the future average employee-workweek index shed 4.5 points to 17.6.

Capital expenditures and technology spending could be on the rise, according to survey results. The future capital expenditures index edged up 2 points to 25.3, and the future technology-spending index added 4.7 points to 19.8.

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.      


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