The New York Fed conducts this monthly survey of manufacturers in New York State. Participants from across the state represent a variety of industries. On the first of each month, the same pool of roughly 175 manufacturing executives (usually the CEO or the president) is sent a questionnaire to report the change in an assortment of indicators from the previous month. Respondents also give their views about the likely direction of these same indicators six months ahead. This index is seasonally adjusted using the Philadelphia Fed's seasonal factors because its own history is not long enough with data only going back a couple of years. (Federal Reserve Bank of New York) Why Investors Care
| Released on 7/15/08 For Jul 2008 | ||||||||||||
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Highlights
Life perked back up just a little bit in the New York region's manufacturing sector in July -- but unfortunately inflation more than perked up. The Empire State's general business conditions index did show a -4.9 reading in July indicating month-to-month contraction but readings for new orders and shipments were both solidly positive, at 8.3 and 13.5. All three readings compare with negative levels in June.
Price readings are extremely elevated at a record 77.9 for prices paid, up from 66.3, and at a record 32.6 for prices received, up from 26.7. The latter suggests that costs are being passed through to final goods, a contrast to this morning's producer report that, despite a big spike in the overall headline, shows only a mild rise in the core rate.
Employment readings were negative indicating factory payroll contraction in the region. The number of employees index fell to -6.3 vs. June's 1.2 while the workweek fell to -8.4 from -2.3. Supply chain readings are consistent with slow conditions showing a big draw down in inventories, -14.7 vs. -2.3, and quickening delivery times, at -2.1 vs. -7.0.
This report, along with a more closely watched report from the Philadelphia Fed, have been indicating greater weakness than the ISM's national manufacturing survey. Nevertheless, these results will certainly not lift expectations for the ISM report nor for the manufacturing outlook. Underscoring the pessimism is the six-month outlook, which is still positive at 15.6 but is at the lowest level since September 2001.
The Empire State manufacturing index has shown slippage in growth but acceleration in prices. The headline index fell in June to minus 8.7 from minus 3.2 the month before. Growth prospects are not good as the new orders index for June came in at minus 6.7 while unfilled orders stood at minus 12.1. But inflation pressures have risen. The prices received index spiked more than 11 points in June to a 26.5 level that is highly elevated. Prices paid remained steady but high at 65.1.
Empire State Manufacturing Survey Consensus Forecast for July 08: -7.0
Range: -15.0 to -2.0
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The Empire State Manufacturing Survey has a much shorter history than the Philadelphia Fed's business outlook survey. The two series tend to move in tandem much of the time, although not each and every month. They are both considered leading indicators for the ISM manufacturing survey. |
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