The May 2013 Empire State Manufacturing Survey indicates that conditions for New York manufacturers declined marginally. The general business conditions index fell four points to -1.4, its first negative reading since January. The new orders index also edged into negative territory, and the shipments index fell to zero. The prices paid index declined eight points to 20.5, indicating a slowdown in selling price increases, while the prices received index was little changed at 4.6. Employment indexes were mixed, showing both a modest increase in the number of employees and a slight decline in the length of the average workweek. Indexes for the six-month outlook were generally lower, suggesting that optimism about future conditions had weakened.

In a series of supplementary survey questions, firms were asked about past and expected changes in both the prices they paid for inputs and the prices they charged their customers. The same questions had previously been asked in surveys conducted in May 2012 and in May of earlier years. In the current survey, respondents, on average, expected the prices they paid to climb by 2.8 percent—the smallest anticipated rise since May 2009. Moreover, the average respondent anticipated an increase of just 1.2 percent in prices received—the smallest expected increase recorded since these questions were first asked in May 2007.

General Business Conditions Index Falls Below Zero
After three months of modestly positive readings, the general business conditions index fell four points to -1.4 in May, pointing to a slight deterioration in business conditions for New York manufacturers for the first time since January. Twenty-five percent of respondents reported that conditions had improved over the month, while 26 percent reported that conditions had worsened. The new orders index also fell below zero, declining three points to -1.2. The shipments index was little changed, holding at zero in a sign that shipments were flat. The unfilled orders index declined three points to -6.8. The delivery time index was unchanged at -3.4, and the inventories index fell three points to -8.0, suggesting a modest decline in inventory levels.

Input Price Increases Slow
The prices paid index fell eight points to 20.5, indicating that input prices were rising at a slower rate. The prices received index remained close to its April reading at 4.6, pointing to a modest yet steady increase in selling prices. The index for number of employees, little changed at 5.7, indicated a small increase in employment levels. The average workweek index, down seven points to -1.1, showed a slight reduction in the length of the average workweek.

Level of Optimism Declines
Indexes for the six-month outlook were generally lower this month, indicating that optimism about future conditions had slipped somewhat. The future general business conditions index declined for a second consecutive month, dropping six points to 25.5. The future new orders index fell seven points to 28.8, and the future shipments index fell fourteen points to 25.2. The future prices paid index retreated fifteen points to 29.6, suggesting that a slower pace of input price increases was expected in the months ahead, and the future prices received index was unchanged at 14.8. The index for expected number of employees fell fourteen points to 11.4, and the future average workweek index fell to 1.1. The capital expenditures index climbed two points to 22.7, and the technology spending index was little changed at 11.4.