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Empire State Manufacturing Survey Conditions Remain Weak
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The Empire State Manufacturing Survey indicates that conditions for New York manufacturers held steady in November. After a string of five consecutive months of negative readings, the general business conditions index rose nine points, to 0.6. While the new orders index edged down to -2.1, indicating that orders were a little lower, the shipments index rose to 9.4, indicating an increase in shipments. The inventories index fell to -12.2—a sign that inventory levels dropped. The prices paid index continued to move downward, reaching 18.3, its lowest level in nearly two years; the decline suggested that the pace of input price increases slowed further in November. The prices received index rose slightly, to 6.1, evidence that selling prices continued to increase. Employment indexes were mixed: employment levels were slightly lower and the average workweek slightly longer. Future indexes surged, indicating a widespread expectation that conditions would improve in the months ahead, with the future general business conditions index rising to its highest level since May.
Supplementary questions to the November 2011 Empire State Manufacturing Survey focused on cash holdings and debt financing; identical questions had been asked in the past few November surveys. Respondents indicated a growing inclination to take on more debt: nearly 30 percent of manufacturing respondents—up from 18 percent in the November 2010 survey and 16 percent in the 2009 survey—said that they expected debt levels to rise. Still, a sizable proportion—slightly more than a third—anticipated declines in debt levels. In response to a parallel question about cash holdings, 41 percent of manufacturers said that they expected these holdings to increase over the next year, while 23 percent expected them to decline—about the same percentages as in last year’s survey. When asked how they would fund capital spending over the next twelve months, respondents reported that they planned to finance 56 percent, on average, with cash, and roughly 30 percent with debt—results that differed little from those in the 2010 and 2009 surveys.
Business Activity Holds Steady
The general business conditions index rose nine points to a level of 0.6, the first positive reading since May and a sign that conditions held steady in November for New York manufacturers after declining for the prior five months. Twenty-four percent of respondents indicated that conditions had improved over the month, while 23 percent indicated that conditions had worsened. The new orders index inched down to -2.1, suggesting that orders were slightly lower. The shipments index rose four points to 9.4, indicating that shipments climbed. The unfilled orders index remained negative for a fifth consecutive month, falling three points to -7.3. The delivery time index was zero, indicating that delivery times were unchanged. The inventories index fell three points to -12.2, suggesting that inventory levels declined at a slightly more rapid pace in November.
Posted: November 15, 2011 Tuesday 08:30 AM