The July Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated for a second consecutive month. The general business conditions index remained below zero, at -3.8. The new orders index also remained negative, while the shipments index increased to a level slightly above zero. The indexes for both prices paid and prices received were positive but lower than last month, suggesting that price increases slowed. The index for number of employees fell to a level near zero, indicating that employment levels held steady, while the average workweek index dropped well into negative territory. Future indexes bounced up after declining steeply in June—a sign that conditions were generally expected to improve over the next six months—but the level of optimism was well below the levels observed earlier this year.

In a series of supplementary questions, manufacturers were asked about changes in sales, employment, and capital spending from 2010 to 2011. Similar questions had been asked in the June and July surveys of 2010. In the current survey, the median respondent anticipated a 6 percent increase in sales and a 3 percent expansion in employment. Capital spending plans, however, were mixed. Considerably more respondents reported increases than decreases in capital spending for 2011, but the median estimated level of spending was down moderately from 2010. On balance, manufacturers indicated that they would be spending more this year than last on equipment (both computer and other), but less on structures. This pattern is similar to the one observed in last June’s survey.

Business Activity Weakens for a Second Consecutive Month
Although the general business conditions index inched up four points to -3.8 in July, it was negative for a second consecutive month, suggesting that business activity had weakened slightly. This month, 23 percent of respondents reported that conditions had improved over the month, while 26 percent reported that conditions had worsened. The new orders index was also below zero for a second consecutive month. It fell two points to -5.5, indicating that the volume of orders was down. The shipments index rose ten points to 2.2, and the unfilled orders index fell twelve points to -12.2. The delivery time index rose to 1.1, and the inventories index dropped to -5.6.