Empire State Manufacturing Survey
June 2008 Report

General Business Conditions

The Empire State Manufacturing Survey indicates that manufacturing activity in New York State continued to deteriorate in June. The general business conditions index fell 5 points, to -8.7. The indexes for new orders, shipments, and unfilled orders were negative and lower than their May levels. The prices paid index remained elevated, falling only slightly below last month’s record high. The prices received index rose markedly and, at 26.7, approached a record level; the future prices received index also rose sharply, reaching a record high of 47.7. Employment indexes hovered around zero. Future indexes generally improved only slightly from the relatively low levels of the past several months, although the capital expenditures index rose several points.

In a series of supplementary questions, manufacturers were asked about their capital spending plans for 2008 relative to their actual spending for 2007, both overall and for a few broad categories of capital (see Supplemental Reports tab). Parallel questions had been asked in June 2007. In the current survey, 32 percent of responding firms reported an increase in overall capital spending in 2008, while 36 percent reported a reduction. These results have markedly less positive implications for capital spending growth among respondents than did the June 2007 survey results, which showed 43 percent of firms reporting increases and just 26 percent reporting declines. Moreover, in every broad category of spending, respondents in 2008 were more restrained, on balance, in their capital spending than they had been in 2007.

Business Activity Continues to Decline
The general business conditions index declined for a second consecutive month, falling 5 points to -8.7. While 21 percent of firms reported that conditions had improved in June, 30 percent reported that conditions had deteriorated. The new orders index posted a similar decline, falling to -5.5 and marking the sixth consecutive month in which levels hovered at or below zero. The shipments index fell 11 points, to -6.5, and the unfilled orders index fell to -10.5. The delivery time index dropped to
-7.0, and the inventories index remained below zero, at -2.3.

Prices Received Rise Sharply
The prices paid index fell only slightly from the record high it had set in May, dipping to 66.3, with 69 percent of respondents reporting that prices had risen in June. The prices received index climbed sharply, increasing 11 points to 26.7, with 31 percent of respondents reporting that prices had risen. Employment indexes suggested little change in employment activity—both the number of employees index and the average workweek index hovered near zero, as they have for the past several months.

Outlook Improves Slightly
Future indexes remained subdued, although they generally improved from May levels. The future general business conditions index rose 8 points to 32.2, with 47 percent of respondents expecting conditions to improve over the next six months, and 15 percent expecting conditions to deteriorate. The future indexes for new orders, shipments, and unfilled orders followed a similar pattern. The future prices paid index continued to climb, reaching 73.3, and the future prices received index rose 17 points, to 47.7—its highest level on record. The future index for number of employees rose to 17.0, while the future workweek index remained below zero. The capital expenditures index advanced to 22.1, indicating a pickup in spending, and the technology spending index rose to 9.3.

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