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Empire State Manufacturing Survey Conditions continued to decline in October
Business activity continued to decline in New York State, according to firms responding to the October 2016 Empire State Manufacturing Survey. The headline general business conditions index slipped five points to -6.8. The new orders index edged up but remained negative at -5.6, indicating an ongoing drop in orders, and the shipments index increased to -0.6, suggesting that shipments were essentially flat. Labor market conditions remained weak, with both employment levels and the average workweek reported as lower. Price indexes increased somewhat, and continued to signal moderate input price increases and a slight increase in selling prices. Indexes for the six-month outlook suggested that manufacturing firms expect conditions to improve in the months ahead.
Business Activity Continues to Decline
For the third consecutive month, manufacturing firms in New York State reported a modest decline in business activity. The general business conditions index retreated five points to -6.8 in October. Twenty-seven percent of respondents reported that conditions had improved over the month, while 33 percent reported that conditions had worsened. The new orders index increased slightly but remained negative at -5.6, indicating that orders continued to decline, and the shipments index rose nine points to -0.6—evidence that shipments were essentially flat. The unfilled orders index was little changed at -10.4, and the delivery time index fell to -11.3, signaling shorter delivery times. The inventories index held at -12.3, suggesting that inventory levels declined at roughly the same pace as last month.
Labor Market Remains Weak
After reaching their lowest levels of the year last month, both labor market indexes rose, but remained negative. The employment index increased ten points to -4.7 and the average workweek index edged up one point to -10.4, indicating that employment counts and hours worked continued to decline. The prices paid index increased six points to 22.6, suggesting that input prices continued to rise at a moderate pace, and the prices received index increased three points to 4.7, pointing to a slight upturn in selling prices.
Outlook Remains Optimistic
Indexes for the six-month outlook suggested that respondents were more optimistic about future conditions than in September. The index for future business conditions increased two points to 36.0. In addition, the index for future new orders rose seven points to 39.0 and the index for future shipments jumped fifteen points to 36.5, indicating that manufacturing firms anticipated a significant increase in activity. In a sign that firms looked to expand employment in the months ahead, the index for future employment moved further into positive territory. Indexes for future prices suggested that firms expected both input prices and selling prices to increase over the next six months. The capital expenditures index rose modestly to 13.2, while the technology spending index edged back to 8.5.
Posted: October 17, 2016 Monday 08:30 AM