New York manufacturers have indicated business conditions in their sector were difficult during the second half of 2015. However, some respondents in a monthly survey believe those conditions will improve in 2016.
The most recent Empire State Manufacturing Survey general business-conditions index improved to -4.6 in December from -10.7 in November.
But the negative reading still indicated an industry in contraction for a fifth straight month, the Federal Reserve Bank of New York reported on Dec. 15. A reading below zero represents a decline in manufacturing activity while a positive number shows expansion.
The general business-conditions index stood at -11.4 in October, -14.7 in September, and -14.9 in August.
This latest survey indicates some “improvement” over the last few months, says Randall Wolken, president of the Manufacturers Association of Central New York (MACNY)
“Overall, I thought it was a better report than the last few we’ve seen,” says Wolken.
The December survey found nearly 25 percent of respondents reported that conditions had improved over the month, while 29 percent said that conditions had worsened.
Economists say manufacturers are struggling amid factors like the strong dollar, tepid global economy, and low prices for oil and other commodities.
On the bright side, the latest Empire State survey suggested improvement in the months ahead. Indexes for the six-month outlook increased “markedly” in December, suggesting “more widespread optimism” about future business conditions, according to the New York Fed.
The index for future-business conditions jumped 18 points to 38.5, and the indexes for future new orders and future shipments also rose “sharply.”
“I’ve had members say they expect a better 2016, or if they’ve had a good 2015, [an] even better 2016,” says Wolken.
Inside the report
The new-orders index remained negative at -5.1, suggesting that orders continued to fall. But, the shipments index rose almost 10 points to 5.5, marking the first increase in shipments since the summer.
The unfilled-orders index edged up 2 points to -16.2, and the delivery-time index rose nearly 3 points to -8.1.
The inventories index increased 5 points to -12.1, indicating ongoing reduction in inventory levels.
The prices-paid index was “little changed” at 4.0, suggesting that input prices continued to “increase slightly.”
Selling prices declined for a fourth consecutive month, with the prices-received index remaining close to recent levels at -4.0.
Labor-market conditions deteriorated “noticeably,” the New York Fed said.
The index for number of employees, negative for a fourth consecutive month, fell 9 points to -16.2, and the average-workweek index plunged 13 points to -27.3, its lowest level since early 2009.
But respondents expect labor-market conditions to improve a little, with the index for expected number of employees “little changed” at 15.2 and the index for expected workweek rising to 10.1.
The capital-expenditures index advanced 3 points to 16.2, and the technology-spending index increased 7 points to 9.1.
“The companies that expect growth or continued optimism will spend in technology and capital, so … part of that optimistic outlook is their willingness to continue and even increase investments,” says Wolken.
The New York Fed 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.