Empire State Manufacturing Survey
August 2008 Report

Survey Indicators
Seasonally Adjusted

General Business Conditions

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved marginally in August. The general business conditions index rose several points, to 2.8.

The new orders and shipments indexes were both just below zero. Both current and future price indexes remained highly elevated, with the future prices received index reaching a new record high. The number of employees index was negative, while future indexes were generally much improved from July’s low levels.

In a series of supplementary questions (see Supplemental Report tab), manufacturers were asked to evaluate the degree to which certain business issues posed problems for their firms; the same questions were asked in the August 2007 and earlier surveys. Of the issues listed, the cost of resources (such as energy and other commodities) was cited most frequently as a major problem, leaping ahead of the labor-related issues topping last year’s list of concerns, such as finding qualified workers, the cost of employee benefits, and workers’ compensation costs. The cost of employee benefits is the second most frequently cited major problem, although it is viewed with somewhat less concern than in last year’s survey. When asked to identify the single most significant problem they faced, 42 percent of manufacturers—up from just 11 percent in last August’s survey—chose the cost of resources.

Business Conditions Flat
The general business conditions index, at 2.8, increased slightly from its July level of -4.9, indicating a marginal improvement in business conditions over the month. Roughly a quarter of respondents reported that conditions improved in August, while 23 percent reported that conditions had deteriorated. The new orders index, after increasing in July, fell slightly below zero to -2.2. The shipments index, in a similar pattern, gave up its July gains, falling to -0.9. The unfilled orders index held steady at -9.0, as did the delivery time index, at -3.4. The inventories index rose sharply after a steep decline last month, rising above zero to 5.6, its highest level in over a year.

Price Indexes Remain Near Record Levels
The prices paid index, at 65.2, declined after reaching a record high in July, but remained extremely elevated. Roughly 67 percent of respondents reported higher prices yet again in August, less than the nearly 80 percent who reported higher prices last month. The prices received index was unchanged, at 32.6, with 39 percent of respondents reporting that they had raised their prices in August. Employment indexes were mixed—the number of employees index held steady at -4.5, and the average workweek index improved to 1.1.

Future General Business Conditions Somewhat Improved
The future general business conditions index recovered to 34.6—a gain of 19 points— following a considerable decline last month. Half of all respondents expect conditions to improve over the next six months, while 16 percent expect conditions to worsen. The future new orders and shipments indexes posted similar gains. Future price indexes remained at elevated levels, with the future prices received index rising to a record high 52.8. Future employment indexes were positive and slightly higher than in August. The capital expenditures index rose marginally, to 14.6, while the technology spending index inched down to 5.6.