May 2009 Report

Survey Indicators
Seasonally Adjusted

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers worsened only modestly in May. Although negative, the general business conditions index rose 10 points to -4.6, its highest level since August of last year. The new orders index fell several points and remained below zero, while the shipments index inched into positive territory. The inventories index remained negative, but rose from last month’s record low. Price indexes also continued to be negative, with the prices received index falling 10 points to a record low. Employment indexes indicated further contraction in employment levels and in the average workweek. Future indexes improved substantially for a second consecutive month; the future general business conditions index rose 11 points to its highest level since September.

In response to a series of supplementary questions on prices, manufacturers estimated that the prices they paid for inputs were essentially unchanged, on average, over the past twelve months—a sharply different assessment than the 8.7 percent average increase reported in a parallel survey conducted in May 2008 (see Supplemental Report tab). Looking ahead to the next twelve months, the average respondent expected a 2.2 percent increase, down from 6.8 percent in last May’s survey. Expectations for the prices charged customers did not change nearly as dramatically: the average manufacturer predicted that prices received would rise 2.6 percent—an increase only slightly smaller than that anticipated in last year’s survey.

General Business Conditions Index Rises for a Second Consecutive Month
The general business conditions index rose for a second consecutive month, climbing 10 points to -4.6, its highest level since August of last year. While 28 percent of respondents reported that conditions had worsened in May, 23 percent indicated that conditions had improved. The new orders index fell several points after rebounding sharply in April; at -9.0, it was still well above the very low levels experienced from October to March. The shipments index rose above zero for the first time since last summer, reaching 1.3. The unfilled orders index rose to -10.2. The delivery time index declined several points, to -13.6. After dropping to a record low last month, the inventories index rose 14 points to -21.6.

Prices Received Index Falls to Record Low
The prices paid index remained near its recent lows, inching up only a few points to -11.4. The prices received index dropped 10 points to a record-low -27.3, with 32 percent of respondents reporting lower prices over the month. Employment indexes remained in the doldrums, but were slightly improved from last month. The index for number of employees rose to -23.9, and the average workweek index advanced to -22.7.

Six-Month Outlook Continues to Brighten
Future indexes improved markedly for a second consecutive month. The future general business conditions index rose 11 points to 43.8, its highest level since late 2007. This index has shown a cumulative increase of more than 40 points over the past two months. The future new orders and shipments indexes have followed a similar path. The future prices paid index remained modestly above zero, while the future prices received index remained just below zero. The future employment indexes were both positive. The future index for number of employees rose for a third month, to 0.7, and the future average workweek index dipped to 4.6. The capital expenditures and technology spending indexes were little changed from last month, both holding just below zero.