January 2010 Report

Survey Indicators
Seasonally Adjusted

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved for the sixth consecutive month in January. The general business conditions index climbed 11 points, to 15.9. The new orders and shipments indexes posted similar increases, and the unfilled orders index rose above zero. Both the prices paid index and the prices received index rose significantly, with the latter moving above zero for the first time in more than a year. Employment indexes advanced into positive territory. Future indexes were highly optimistic; activity and employment were widely expected to improve over the next six months. Prices, however, were expected to continue to climb in the months ahead.

In a series of supplementary questions, manufacturers were asked about their capital spending plans (see Supplemental Reports tab). Looking ahead to the next six to twelve months, 44 percent of respondents indicated that they expected to increase capital spending relative to its level in the past six to twelve months, while just 12 percent anticipated a decline. When the same question had been asked in October 2007, 42 percent of respondents had anticipated increased capital spending, while just under 19 percent had expected reductions. The most commonly cited factor behind increased investment was a need to replace IT (information technology) equipment, followed closely by a need to replace other capital goods. The most widely cited factors behind steady or decreased capital investment were low capacity utilization and low expected sales growth.

Conditions Improve for a Sixth Consecutive Month
The general business conditions index rose 11 points, to 15.9—its sixth consecutive reading above zero. One-third of respondents reported that conditions had improved in January, while 17 percent reported that conditions had deteriorated. The new orders index shot up 18 points, to 20.5, and the shipments index rose 13 points, to 21.1. After falling to -21.1 in December, the unfilled orders index rose to 2.7 this month. The delivery time index also climbed above zero, to 6.7. The inventories index, at -17.3, remained well below zero, as it has for much of the past year.

Both Prices Paid and Prices Received Now Rising
Manufacturers reported rising prices in January. The pace of input price increases accelerated, with the prices paid index rising 12 points to 32.0, its highest level in more than a year. A third of respondents said that input prices had risen over the month. The prices received index rose above zero for the first time in more than a year, climbing from -9.2 to 2.7. Employment indexes moved into positive territory after dipping below zero last month. The index for number of employees rose to 4.0, while the average workweek index rose to 5.3.

Increased Activity Widely Expected in the Months Ahead
Future indexes indicated that conditions were widely expected to improve further in the months ahead. The future general business conditions index rose to 56.0, with 63 percent of respondents expecting conditions to improve over the next six months. The future new orders and shipments indexes advanced to similar levels, and the future unfilled orders index rose to 22.7, its highest level in several years. The future inventories index hovered just above zero, suggesting that inventory levels were expected to level off. Prices were expected to climb further”the future prices paid index rose 14 points to 54.7, and the future prices received index fell slightly, to 20.0. Future employment indexes were well above zero, an indication that employment levels were expected to rise. The capital expenditures index rose to 33.3, and the technology spending index was little changed at 13.3.

Note: Data have undergone an annual benchmark revision. All historical data have been revised using new seasonal factors.