The January 2013 Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to decline at a modest pace. The general business conditions index was negative for a sixth consecutive month and, at -7.8, was little changed from its recent readings. The new orders index fell four points to -7.2, and the shipments index declined a full fifteen points to -3.1. Price increases picked up, with the prices paid index rising six points to 22.6 and the prices received index rising ten points to 10.8, the highest readings for both of these indexes in several months. Labor market conditions remained weak, with the indexes for both the number of employees and the average workweek remaining below zero for a fourth month in a row. The level of optimism about the six-month outlook rose somewhat from December, but remained low compared with levels in early 2012. Significantly, the capital expenditures index fell to 4.3, its lowest reading since 2009.

In a series of supplementary questions, manufacturers were asked about anticipated changes in their workforce and the factors underlying these changes. Twenty-seven percent of survey respondents indicated that they expected the total number of workers at their firm to increase over the next twelve months, while 19 percent predicted declines in their workforce—a considerably less positive balance than in last January’s survey. Among firms planning to boost employment, high expected sales growth was widely reported to be the most important impetus to hiring; conversely, low expected sales growth was most widely cited as the primary restraint on hiring. Sales growth was also seen as the primary factor behind employment increases and decreases in the 2012 survey.

Business Conditions Continue Their Modest Decline
Business activity for New York manufacturers declined at a modest pace for a sixth consecutive month, according to the January survey. The general business conditions index was little changed at -7.8, with 26 percent of respondents reporting that conditions had improved over the month and 34 percent reporting that conditions had worsened. The new orders index fell four points to -7.2, suggesting that orders had declined. After two months of positive readings, the shipments index dropped fifteen points to -3.1, pointing to a slight fall in shipments. The unfilled orders index was little changed at -7.5. The delivery time index held steady at -2.2, and the inventories index remained negative at -8.6—a sign that inventory levels continued to fall.

Price Increases Pick Up
Prices increases steepened, with the indexes for both prices paid and prices received reaching their highest levels in several months. The prices paid index rose six points to 22.6; twenty-five percent of respondents reported that input prices had increased and just two percent reported that input prices had dropped. The prices received index rose ten points to 10.8. Employment indexes suggested that labor market conditions remained weak. The index for number of employees was -4.3, and the average workweek index was -5.4. Although these readings were somewhat higher than in December, both indexes were negative for a fourth consecutive month.

Outlook Remains Mildly Positive
Indexes for the six-month outlook remained positive and rose slightly, but generally stayed at levels below those seen a year earlier. The future general business conditions index rose four points to 22.4, with 41 percent of respondents expecting conditions to improve in the months ahead and 18 percent expecting conditions to worsen. The future new orders index climbed eight points to 25.1, and the future shipments index inched up to 23.9. Future price indexes declined, but remained well above zero. Although future employment indexes inched lower, they still conveyed an expectation that employment levels and hours worked would increase slightly over the next six months. The capital expenditures index dropped nine points to 4.3, its lowest level since 2009, and the technology spending index edged up to 5.4.