N.Y. Manufacturing Slows, Outlook Improves

Manufacturers across the state of New York are still struggling but the outlook for the next six months is improving, according to a closely watched monthly survey.

The Empire State Manufacturing Survey found conditions getting worse in June at a faster pace than in May. After a 35 point improvement from March to April, the general index fell slightly in May and another 5 points in June to a negative 9.4, but remained well above the string of deeply negative readings observed from October through March.

The new orders index remained negative and near last month’s level, while the shipments index fell 6 points to minus 4.8. The inventories index declined and remained well below zero. Price indexes were negative but modestly higher than in May, and employment indexes stayed below zero. Future indexes were generally positive and continued to rise, conveying an expectation that conditions should improve over the next six months. Both the capital spending and technology spending indexes rose into positive territory for the first time since October of last year, the survey said.

The future general business conditions index advanced 4 points, to 47.8, its highest level in nearly two years; 61 percent of respondents expected conditions to improve over the next six months. The future new orders index, at 45.8, suggested similar optimism, as did the future shipments index at 48.7.

In the current survey, 56 percent of respondents reported reductions in overall capital spending in 2009, while just 20 percent reported increases. Last year at the same time, many more respondents were telling surveyors they were increasing capital spending. In June 2008, 32 percent reported increases and 36 percent reported decreases.

Nearly 55 percent of those surveyed said sales and demand trends influenced their decisions to reduce spending. Sales and demand trends influenced 21 percent to spend more.

Contact Thomas L. Gallagher at tgallagher@joc.com.