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Empire State Manufacturing Survey Conditions Weakened Somewhat
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The November 2013 Empire State Manufacturing Survey indicates that manufacturing conditions weakened somewhat for New York manufacturers. The general business conditions index fell four points to -2.2, its first negative reading since May. The new orders index also entered negative territory, falling thirteen points to -5.5, and the shipments index moved below zero with a fourteen-point drop to -0.5. The prices paid index fell five points to 17.1, indicating a slowing of input price increases. The prices received index fell to -4.0; the negative reading was a sign that selling prices had declined—their first retreat in two years. Labor market conditions were also weak, with the index for number of employees falling four points to 0.0, while the average workweek index dropped to -5.3. Despite the negative readings registered by many of the indexes for current activity, indexes for the six-month outlook continued to convey a strong degree of optimism about future business conditions.
Supplementary questions in the latest survey focused on recent and expected changes in the prices paid by firms for several major budget categories, including wages, employee benefits, insurance, energy, and other commodities. Manufacturers, on average, predicted that prices paid for most budget categories would increase at a somewhat faster rate in calendar 2014 than in 2013. Prices paid overall were reported to have risen 3.4 percent on average in 2013 and were expected to increase 4.0 percent in 2014. When asked about expected changes in the prices they charge, firms predicted an average increase of 1.8 percent in 2014. For more details, see the full supplemental report.
Business Conditions Weaken
Manufacturing conditions weakened somewhat, according to the November survey. After slowly drifting down since July, the general business conditions index fell below zero for the first time since May, slipping four points to -2.2. This month, 23 percent of respondents reported that conditions had improved while 25 percent reported that conditions had worsened. The new orders index also moved below zero, falling thirteen points to -5.5. The shipments index fell fourteen points to -0.5, and the unfilled orders index declined eleven points to -17.1. The delivery time index rose seven points to -4.0, and the inventories index was little changed at -1.3.
Employment Levels Flat
Labor market conditions were subdued. The index for number of employees drifted downward for a third consecutive month, coming in at 0.0 in November in a sign that employment levels were flat. The average workweek index fell nine points to -5.3, pointing to a decline in hours worked. Price indexes were also lower. The prices paid index fell five points to 17.1, indicating that the pace of input price increases slowed. The prices received index fell six points to -4.0, signifying that selling prices dropped; the price decline was the first in two years.
Six-Month Outlook Remains Favorable
Although many of the indexes for current activity posted negative readings, indexes for the six-month outlook generally conveyed strong optimism about future business prospects. The future general business conditions index fell three points, but remained at a respectably high level of 37.5. The future new orders index climbed three points to 40.3, its highest level in more than a year, and the future shipments index rose six points to 37.8. The future prices paid index fell to 42.1, and the future prices received index dropped eight points to 17.1. The index for expected number of employees surged fifteen points to 22.4, indicating that strong gains in employment are expected, though the future average workweek index fell to -4.0. The capital expenditures index declined six points to 9.2, and the technology spending index was little changed at 13.2.
Posted: November 15, 2013 Friday 08:30 AM