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Empire State Manufacturing Survey
 
The monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York.
 

July 2008 Report

General Business Conditions

The Empire State Manufacturing Survey indicates that manufacturing activity in New York State worsened for a third consecutive month in July. The general business conditions index increased slightly from last month’s level but, at -4.9, remained below zero. The new orders and shipments indexes both rose into positive territory, while the unfilled orders index was negative and drifted downward. The inventories index fell to its lowest level in a year. The prices paid and prices received indexes both reached record highs, and the employment indexes dipped below zero. The future general business conditions index fell sharply, reaching a level not seen since September 2001.

In a series of supplementary questions, manufacturers were queried about changes in their sales and employment levels from 2007 to 2008, as well as recent modifications in their production plans for the second half of this year. The median respondent expected both sales and employment to be unchanged for the full calendar year, even though sales were reported to be up 5 percent in the first half of this year. Moreover, substantially more manufacturers reported scaling back production plans (35 percent) than boosting them (27 percent) in recent months—a contrast from last year’s results, when reported increases outnumbered reported decreases by a wide margin. Finally, nearly 30 percent of respondents indicated that rising energy costs would lead them to charge substantially higher prices for their products in the second half of 2008.

Business Activity Deteriorates Further
The July general business conditions index, at -4.9, rose just slightly from last month’s level. This reading was the sixth consecutive monthly reading near or below zero. The new orders index rose 14 points, to 8.3, its highest level in 2008 but well below readings of late 2007. The shipments index also posted a significant increase, advancing 20 points to 13.5. The unfilled orders index rose to -8.4. The delivery time index remained negative, at -2.1, and the inventories index fell markedly, to -14.7, its lowest level in a year.

Price Indexes Reach Record Levels
The prices paid index shot up 12 points to 77.9, a new record, with 79 percent of respondents reporting higher prices. The prices received index, which had jumped in June, rose further in July, to a record-high 32.6. Forty-one percent of respondents said that they had raised prices. Employment indexes were negative and lower than in June: the index for number of employees fell to -6.3, and the average workweek index dropped to -8.4.

Future General Business Conditions Index Tumbles
In a sign that the outlook remains very subdued, the future general business conditions index tumbled 17 points to 15.6, its lowest level since September 2001. The future new orders and shipments indexes hovered just under 30, where they have been for the past few months. The future delivery time index fell sharply, to -19.0. The future prices paid index continued to climb, reaching a new high of 74.7. The future prices received index, at 47.4, remained near the record level set last month. The future index for number of employees fell to 10.6, while the future workweek index rose to 2.1. After rising last month, the capital expenditures index gave back its gains, falling to 11.6. In a parallel trend, the technology spending index fell to 6.3.