Empire State Manufacturing Survey
December 2008 Report

Survey Indicators
Seasonally Adjusted

General Business Conditions

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated significantly in December. The general business conditions index, at -25.8, held near the record low set in November. The new orders and shipments indexes also remained near their recent record lows, and the unfilled orders index dropped to a new low. The indexes for prices paid and prices received fell below zero, and employment indexes remained deep in negative territory. Future indexes remained subdued, with the capital spending and technology spending indexes remaining well below zero.

In response to a series of supplementary questions (see Supplemental Report tab), manufacturers predicted that growth in prices paid in most budget categories would decelerate in calendar year 2009. Respondents indicated that across all categories, prices paid had risen 6.7 percent on average in 2008 but were expected to rise by a more moderate 3.5 percent in 2009. The most pronounced downshift in price increases was foreseen for commodities. A comparison of expected price changes from the December 2007 survey with the actual changes reported currently reveals that prices paid rose only slightly more in 2008 than had been expected in last year’s survey. Respondents were also asked to gauge the likelihood that the prices they paid overall would increase or decrease within certain specified ranges. The average respondent saw a roughly 12 percent chance that prices would rise by 8 percent or more and a 4 percent chance that prices would decline by 8 percent or more.

General Business Conditions Index at Record Low
The general business conditions index remained very close to the record low set in November, inching downward just slightly to -25.8. Nearly 50 percent of respondents—up from 44 percent last month—reported that conditions had deteriorated in December, while 23 percent said that conditions had improved, compared with 19 percent in November. The new orders index, at -20.8, and shipments index, at -8.8, were marginally higher than last month’s low levels. The unfilled orders index continued to drop, falling 4 points to -27.7, a record low. The delivery time index remained negative, at -9.6, and the inventories index, while negative, rose 9 points to -17.0.

Price Indexes Turn Negative
The indexes for both prices paid and prices received turned negative in December. The prices paid index fell a striking 28 points to -7.5, with 27 percent of respondents reporting that prices had fallen and 19 percent reporting that prices had risen over the month. The prices received index fell 18 points to -11.7, with 21 percent of respondents reporting lower prices and 10 percent reporting higher prices. Employment indexes remained well below zero. The index for number of employees rose from its November level, to -23.4, while the average workweek index held steady at -26.6.

Outlook Remains Subdued
The future general business conditions index improved slightly from last month’s low level, rising 6 points to 19.5. The future new orders index fell marginally, while the future shipments index rose several points. The future indexes for both prices paid and prices received hovered slightly above zero, while future employment indexes remained just below zero. The capital spending index held near its November record low, at -10.6, and the technology spending index fell to a new low of -12.8.

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