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Empire State Manufacturing Survey Conditions signaled a decline
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The December 2014 Empire State Manufacturing Survey indicates that business activity declined for New York manufacturers. The headline general business conditions index dropped fourteen points to -3.6, its first negative reading in nearly two years. The new orders index also fell into negative territory, tumbling eleven points to -2.0, and the shipments index fell to -0.2. Labor market conditions were mixed, with the index for number of employees holding steady at 8.3, while the average workweek index declined to -11.5. The prices paid index was little changed at 10.4, indicating a continued modest increase in input prices, while the prices received index climbed to 6.3. Indexes for the six-month outlook continued to convey optimism, but to a somewhat lesser extent than in recent months.
General Business Conditions Index Retreats below Zero
For the first time in nearly two years, the general business conditions index signaled a decline in business activity for New York manufacturers. The index retreated fourteen points to -3.6 in December, with 19 percent of respondents reporting that conditions had improved over the month and 23 percent reporting that conditions had worsened. Overall, readings for the headline index during the fourth quarter of 2014 mark a significant downshift in activity from the levels seen during the five-month period from May through September. The new orders index fell eleven points to -2.0, indicating a small decline in orders, and the shipments index dropped twelve points to -0.2—a sign that shipments were flat. The unfilled orders index plummeted seventeen points to -24.0. The delivery time index drifted down to -14.6, suggesting that delivery times were shorter, and the inventories index fell to -11.5, pointing to lower inventory levels.
Small Increases Seen in Input and Selling Prices
The prices paid index was little changed at 10.4, signaling only a modest increase in input prices for a third consecutive month. After falling to zero in November, the prices received index advanced six points to 6.3 in December—evidence of a small increase in selling prices. Labor market indicators were mixed. The index for number of employees, at 8.3, held steady for a third consecutive month, suggesting that employment levels continued to increase. The average workweek index, by contrast, declined for a fourth consecutive month, and at -11.5, pointed to a noteworthy decline in hours worked.
Optimism Softens, but Remains High
Indexes assessing the six-month outlook were generally lower this month, but nevertheless conveyed considerable optimism about future business activity. The index for future general business conditions fell nine points to 38.6—still a fairly high figure by historical standards. The future new orders and shipments indexes declined to similar levels. The index for expected number of employees was 20.8, indicating that employment is expected to expand briskly, and the future average workweek index climbed to 12.5, its highest level in more than two years. The capital expenditures index fell twelve points to 15.6, and the technology spending index inched down to 17.7.
Posted: December 15, 2014 Monday 08:30 AM