Empire State Manufacturing Survey
The monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York.

July 2007 Report

General Business Conditions

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to improve in July. The general business conditions index held near its June level, at 26.5.

The new orders index climbed for a fourth consecutive month to its highest level in more than a year, while the shipments index remained near its June level. The inventories index tumbled sharply into negative territory. The prices paid index, although elevated, eased modestly, as the prices received index held steady. Employment indexes were modestly positive. Future indexes conveyed significant optimism, with notable improvements in the outlook for employment and capital spending.

In a series of supplemental questions, manufacturers were asked how much their sales and employment levels had changed from the first half of 2006 to the first half of 2007 and what their expectations were for the full year. Similar questions had been asked a year ago (see Special Questions tab). In the current survey, the median sales increase was 6 percent for both the first half of 2007 and the full year; the latter figure was a bit lower than in last July’s survey. The median change in employment was 0 percent for the first half of 2007 but 2 percent for the full year, the same as in last July’s survey.

Additionally, manufacturers were asked about recent revisions to production plans for the second half of 2007. Roughly 40 percent reported upward modifications, while 26 percent had scaled back production plans—a slightly less positive balance than was reported in the 2006 survey.

General Business Conditions Index Remains High
After surging last month, the general business conditions index, at 26.5, remained near its June level, with 41 percent of respondents reporting improving conditions in July and 14 percent reporting worsening conditions. The new orders index climbed for a fourth consecutive month, rising 9 points to 26.5, its highest level in more than a year. The shipments index, at 29.2, held near last month’s level, while the unfilled orders index rose slightly above zero. The delivery time index remained slightly negative, as the inventories index tumbled 23 points to -19.8.

The prices paid index dipped several points but remained elevated at 34.6. The prices received index was little changed at 8.6. Employment indexes were positive: the number of employees index rose several points to 11.4, while the average workweek index inched up to 6.2.

Optimism Continues
Future indexes conveyed continued optimism. The future general business conditions index rose slightly to 48.2, with more than half of respondents expecting conditions to improve over the next six months. The future shipments index climbed to 55.8, its highest level in well over a year. Pricing pressures are expected to ease somewhat: the future prices paid index, while elevated, fell several points to 43.2, while the future prices received index climbed 11 points to 32.4. Future employment indexes were positive and higher than in June. The capital expenditures index recovered much of the ground it lost last month, rising to 29.6, as the technology spending index rose to 22.2.

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