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The October 2014 Empire State Manufacturing Survey indicates that business activity grew modestly for New York manufacturers. The headline general business conditions index fell twenty-one points to 6.2, signaling that the pace of growth slowed significantly from last month. The new orders index dropped nineteen points to -1.7, indicating a slight decline in orders, and the shipments index fell twenty-six points to 1.1, indicating that shipments were flat. The employment index rose seven points to 10.2, pointing to an increase in employment levels, while the average workweek index fell to a level just below zero, suggesting that hours worked held steady. Both price indexes fell this month—a sign that the pace of growth had moderated for input prices and selling prices. Indexes for the six-month outlook were somewhat lower than last month, but continued to convey a high degree of optimism about future business conditions.
After reaching a multiyear high last month, the general business conditions index plummeted twenty-one points to 6.2, pointing to a substantial slowing in the pace of growth in business activity for New York manufacturers. The decline in the index was driven by a drop in the share of respondents reporting that conditions had improved relative to the preceding month’s; this share fell from 46 percent to 25 percent in October, while the share of respondents reporting worsening conditions was little changed at 19 percent. The new orders index fell eighteen points to -1.7—evidence of a slight decrease in orders. Like the drop in the general business conditions index, this decline reflected a large drop in those reporting an increase. The shipments index tumbled twenty-six points to 1.1, indicating that orders were flat on the heels of a sharp increase last month. The unfilled orders index rose slightly but remained negative at -4.5. The delivery time index was little changed at -5.7, and the inventories index, up ten points to 2.3, showed that inventory had increased slightly after declining the prior three months.
Price Increases Less Widespread
Both price indexes declined, indicating a slower pace of growth in input and selling prices alike. The prices paid index fell thirteen points to 11.4, its lowest level in more than two years, and the prices received index fell eleven points to 6.8. Employment indexes pointed to a modest increase in employment levels and little change in hours worked. The index for number of employees climbed seven points to 10.2, and the average workweek index dropped four points to -1.1.
Growth Expected to Continue in the Months Ahead
Most of the indexes assessing the future outlook were down from last month. Nevertheless, they remained fairly high by historical standards, and conveyed an expectation that activity would continue to grow in the months ahead. The index for future general business conditions fell five points to 41.7. The future new orders index fell three points to 42.3, and the future shipments index declined five points to 42.5. The index for expected number of employees dropped to 12.5, and the future average workweek index fell below zero. The capital expenditures index climbed nine points to 21.6, its highest level in several months, and the technology spending index rose to 15.9.
Participants from across the state in
a variety of industries respond to a questionnaire and
report the change in a variety of indicators from the
previous month. Respondents also state the likely direction
of these same indicators six months ahead. April 2002
is the first report, although survey data date back
to July 2001.
The survey is sent on the first day of each month to
the same pool of about 200 manufacturing executives
in New York State, typically the president or CEO. About
100 responses are received. Most are completed by the
tenth, although surveys are accepted until the fifteenth.
Respondents come from a wide range of industries from
across the New York State. No one industry dominates
the respondent pool.
The survey's main index, general business conditions, is not a weighted average of other indicators—it is a distinct question posed on the survey.
Each index is seasonally adjusted when stable seasonality is detected.
Each January, all data undergo a benchmark revision
to reflect new seasonal factors.
The Empire State Manufacturing Survey seasonally adjusts data based on the Census X-12 additive procedure utilizing a logistic transformation.
The "increase" and "decrease" percentage
components of the diffusion indexes are each tested
for seasonality separately and adjusted accordingly
if such patterns exist. If no seasonality is detected,
the component is left unadjusted. The "no change"
component contains the residual, computed by subtracting
the (adjusted) increase and decrease from 100. Seasonal
factors are forecast in December for the upcoming year.
Data are adjusted using a logistic transformation.
The not-seasonally adjusted series, expressed in decimal
form (referred to as "p"), is transformed
using the following equation:
X = log(p/(1-p))
The seasonal factor is then subtracted from X:
adjX = X - seasonal factor
The result is then transformed using the following
SA Series = exponential(adjX)/(1+exponential(adjX))