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N.Y. manufacturing index back in positive territory in July

By Eric Reinhardt (ereinhardt@cnybj.com)

Date:

But manufacturers are pessimistic about next six months                              

The Empire State Manufacturing Survey’s benchmark general business-conditions index climbed 12 points in July to 11.1.

The general business-conditions index — the monthly gauge of current conditions in New York’s manufacturing sector — also had risen 10 points in June to just miss positive territory at -1.2. The last two months of gains followed a 36-point plunge in the index in May

The July reading — based on firms responding to the survey — indicates business activity “increased modestly” in New York, the Federal Reserve Bank of New York said in its July 15 report. 

A positive index number indicates expansion or growth in manufacturing activity, while a negative reading points to a decline in the sector. 

The 11.1-point figure is derived from the survey finding that 34 percent of respondents reported that conditions had improved over the last month, while 23 percent said that conditions had worsened, the New York Fed said.

Survey details

Perhaps overshadowing the positive current general business-conditions numbers was the survey’s finding that the state’s manufacturers have become much more pessimistic about the next six months. 

The New York Fed found manufacturing firms expect activity to decline over the next six months, a sentiment only expressed three other times in the survey’s two-decade long history.

The index for future business conditions plunged 20 points to -6.2. Orders are not expected to increase, and shipments are expected to be only slightly higher. 

Respondents expect delivery times and unfilled orders to decline over the next half-year and expected price increases were lower than in recent months. 

As for the current month’s results, the new-orders index was little changed at 6.2, pointing to a “small increase” in orders, while the shipments index surged to 25.3, indicating “strong growth” in shipments, the New York Fed said. 

The unfilled-orders index held steady at -5.2, indicating that unfilled orders contracted for a second consecutive month. 

The delivery-times index fell for a third consecutive month, declining 6 points to 8.7, suggesting that delivery times lengthened, though at the slowest pace in over a year. 

The inventories index was little changed at 14.8, signaling that inventories expanded.

The index for number of employees held steady at 18, pointing to a “solid increase” in employment, and the average-workweek index came in at 4.3, indicating a slight increase in hours worked. 

They remained elevated, but price indexes moved “notably lower,” indicating a deceleration in price increases. The prices-paid index fell 14 points to 64.3, and the prices-received index moved down 12 points to 31.3.

The capital-spending and technology-spending indexes also fell, but remained positive, the New York Fed said.

The Federal Reserve Bank of New York 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.