February 2009 Report

Survey Indicators
Seasonally Adjusted

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated significantly in February. The general business conditions index fell to a new low of -34.7. The new orders index also fell to a new low, the unfilled orders index stayed close to its recent record low, and the shipments index—despite a slight improvement—remained negative. The indexes for both prices paid and prices received held below zero, with the latter dropping sharply. Employment indexes remained deep in negative territory; the average workweek index slipped to a record low. The future general business conditions index was negative for a second consecutive month as many of the forward-looking indexes remained close to recent lows. The future index for number of employees fell particularly sharply, eclipsing last month’s record low.

In response to a series of supplementary questions (see Supplemental Report tab) on manufacturers’ use of commercial space, respondents indicated that they owned close to three-quarters of the space they used in New York State, and leased the remainder—mostly industrial space. When asked how the total amount of space they currently held—owned and leased—compared with the amount they required, nearly 62 percent reported that they held about the “right amount,” while 27 percent said that they held too much; fewer than 12 percent said they held too little space. Asked about the use of space in the remainder of 2009, the average respondent predicted a 17 percent reduction in the amount of industrial space leased but a modest increase in the amount of space owned.

General Business Conditions Index Falls to a New Low
The general business conditions index dropped 12 points in February, reaching a record-low -34.7. While 16 percent of respondents reported that conditions had improved over the month, 51 percent said that conditions had worsened. The new orders index also showed a marked decline, dropping 8 points to -30.5. The shipments index rose several points but remained below zero at -8.1. The unfilled orders index, at -24.1, remained close to its recent low. The delivery time index rose several points to -12.6, and the inventories index rose to -8.1.

Prices Received Index Tumbles to a Record Low
The indexes for both prices paid and prices received remained negative for a third consecutive month. Although the prices paid index climbed 4 points—its first rise in seven months—it remained decidedly negative at -13.8. The prices received index fell a precipitous 17 points to a record-low -20.7, with 26 percent of respondents reporting that prices declined in February. Employment indexes fell sharply to very low levels. The number of employees index fell 13 points to -39.0, with 44 percent reporting a drop in employment and 5 percent reporting an increase. The average workweek index slipped 7 points to a record-low -31.0, with 38 percent reporting a reduction in workers’ hours.

Future Outlook Remains Glum
The future general business conditions index, at -6.6, was below zero for a second consecutive month. Thirty-five percent of respondents expected conditions to improve over the next six months while 41 percent expected conditions to worsen. The future new orders and unfilled orders indexes remained negative, while the future shipments index rose above zero. Continuing their decline, the future indexes for both prices paid and prices received fell below zero in February. This development, a first in the history of the survey, suggested that manufacturers expected both prices paid and prices received to be lower six months hence. The future index for number of employees tumbled 18 points to -29.4, overtaking last month’s record low.

The capital expenditures index held firm at -11.5, and the technology spending index fell for a fifth consecutive month, reaching a record-low -19.5.