Empire State Manufacturing Survey
October 2008 Report

Survey Indicators
Seasonally Adjusted

General Business Conditions

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated significantly in October. The general business conditions index dropped 17 points to a record-low -24.6. The new orders index also fell to a record low, and the indexes for shipments, unfilled orders, and inventories all declined sharply. The prices paid index eased significantly, to its lowest level of the year, while the prices received index also fell, although less sharply. Employment indexes were negative. Future indexes declined markedly with exceptionally large declines in the future new orders and shipments indexes.

In response to a series of supplementary questions (see Supplemental Report tab), firms reported little change in their borrowing needs, some tightening in credit availability, and an increase in borrowing costs from three months ago. Firms reported similar conditions in a parallel survey conducted in March 2008, except that a considerably larger proportion of respondents in the current survey noted steady to higher borrowing costs. Roughly 22 percent of respondents in the current survey said that their need for borrowed funds had increased over the past year, but a larger proportion, 31 percent, indicated that their need had decreased. When asked about changes in borrowing needs since July, 20 percent of respondents reported higher borrowing needs and almost the same percentage reported lower needs. On the issue of credit availability, 25 percent of firms surveyed this month reported tighter credit standards over the past three months, while just 1 percent noted more relaxed standards.

General Business Conditions Index Falls to Record Low
The general business conditions index tumbled 17 points to
-24.6, its lowest level on record. While 21 percent said that conditions had improved in October, 45 percent reported that conditions had worsened. The new orders index fell 25 points to -20.5, also establishing a new low. The shipments index retreated 9 points to -8.9, and the unfilled orders index fell to
-12.2. The delivery time index drifted down to -9.8. The inventories index recorded a sharp decline, falling 15 points to
-17.1, with 41 percent reporting that inventories were lower in October.

Price Indexes Retreat
The prices paid index moved downward for a third consecutive month, dropping 13 points to 31.7, its lowest level in more than a year. The prices received index also fell, although to a lesser degree, shedding 3 points to reach 20.7. Employment indexes were negative. The index for number of employees, at -3.7, remained close to last month’s level, and the average workweek index fell to -9.8.

Outlook Is Subdued
The future general business conditions index dropped 19 points to 24.2, with 47 percent of respondents expecting conditions to improve over the next six months and 23 percent expecting conditions to worsen. The future new orders index posted a marked decline, falling 26 points to 20.4. The future inventories index tumbled to -20.7, a record low. Future price indexes fell modestly. The future index for number of employees dropped close to zero, while the future average workweek index fell into negative territory. The capital expenditures index fell 10 points to 6.1, its lowest level since 2001, and the technology spending index declined to 7.3.

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