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NY manufacturers report moderate growth in March

By Journal Staff


Rising prices are a concern though


Recent business-activity growth continued for New York manufacturers in March, according to a survey released March 15 by the Federal Reserve Bank of New York. But increased input prices, driven by higher gas prices, emerged as a trouble spot.

The Empire State Manufacturing Survey’s general business conditions index rose for the fifth straight month in March, ticking up 0.7 points to 20.2. The index has been positive since November 2011.

March’s survey results indicate a “continued moderate pace of growth in business activity,” according to the New York Fed. Among manufacturers responding to the survey, 33.3 percent said business conditions improved in March. An additional 13.1 percent said conditions worsened, while 53.5 percent indicated conditions remained the same as in February.

New orders continued to grow, but not as quickly as in February. The new-orders index registered 6.8 in March, down 2.9 points from the prior month.

The story was much the same for shipments, which also grew at a slower pace than February. The shipments index fell 4.6 points to remain positive at 18.2.

The unfilled-orders index remained negative at -1.2, although it rose 5.8 points from the previous month. Delivery times increased, with the delivery-time index spiking 6.2 points to 7.4. 

Prices ballooned in March, as the prices-paid index shot up 24.7 points to 50.6. That could be cause for concern if manufacturers continue to pay high prices in coming months, according to Randall Wolken, the president of the Manufacturers Association of Central New York (MACNY).

“One input that’s gone up for some manufacturers is the cost of gas,” Wolken says. “The reality is that we are seeing some price pressures, and we’ll need to watch it over the next couple of months to see if it continues.”

However, manufacturers also received higher prices in March. The prices-received index notched 13.6, a slight dip of 1.7 points from February, but still indicating rising prices.

Employment was a bright spot in the survey, as manufacturers indicated they hired employees and expanded their employees’ workweeks. The number-of-employees index climbed 1.8 points to 13.6, while the average employee-workweek index jumped 11.5 points to 18.5. 


Future expectations

Manufacturers in New York remained upbeat about the future, according to the survey’s forward-looking indicators. Those indicators measure expectations for a time six months in the future.

The future general business conditions index slid 2.9 points to 47.5. Still, the majority of manufacturers expect business conditions to be better in six months than they are now. Among survey respondents, 54.3 percent believe business conditions will be better in six months, 6.8 percent believe they will be worse, and 38.9 percent believe they will remain the same.

The future new orders index dipped 2.7 points to 42. The future shipments index dropped 6.2 points to 43.2.

Despite the downward turns in those indicators, they remained in positive territory. That means more survey respondents were positive about future new orders and shipments than were negative.

“The outlook continues to remain optimistic, which means manufacturers will continue to make investments,” Wolken says. 

Survey results nudged the future capital-expenditures index up by 0.3 points. It posted 32.1 in March.

“I always see that as one of the most important indicators,” Wolken says. “Capital investment usually signals a longer-term need.”

Technology spending could also be on the rise, as the future technology-spending index climbed. It gained 5.9 points to 24.7.
And, manufacturers took an optimistic view about future employment, driving the future number-of-employees index up 2.7 points to 32.1 and swelling the future average employee-workweek index by 2.2 points to 21.

Manufacturers predicted more unfilled orders in six months, as the future unfilled-orders index climbed 3.9 points to 8.6. Meanwhile, the future inventories index skidded 5.7 points to 4.9, and the future delivery-time index rose 2.6 points to 4.9.

Survey respondents expect to pay and receive higher prices in the future. The future prices-paid index increased 4.3 points to 66.7, while the future prices-received index fell 2 points to 32.1.

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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