The Empire State Manufacturing Survey in July 2011 remained in negative territory for the second month in a row – but the headlines were slightly less bad.
Econintersect continues to warn readers that this is a survey (a quantification of opinion) and tends at times to correspond and and other times to conflict with the real data which will be released in the months to come. Over time, there is a general correlation with real manufacturing data – but month-to-month conflicts are frequent.
The July Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated for a second consecutive month. The general business conditions index remained below zero, at -3.8. The new orders index also remained negative, while the shipments index increased to a level slightly above zero. The indexes for both prices paid and prices received were positive but lower than last month, suggesting that price increases slowed. The index for number of employees fell to a level near zero, indicating that employment levels held steady, while the average workweek index dropped well into negative territory. Future indexes bounced up after declining steeply in June—a sign that conditions were generally expected to improve over the next six months—but the level of optimism was well below the levels observed earlier this year.
In a series of supplementary questions, manufacturers were asked about changes in sales, employment, and capital spending from 2010 to 2011. Similar questions had been asked in the June and July surveys of 2010. In the current survey, the median respondent anticipated a 6 percent increase in sales and a 3 percent expansion in employment. Capital spending plans, however, were mixed. Considerably more respondents reported increases than decreases in capital spending for 2011, but the median estimated level of spending was down moderately from 2010. On balance, manufacturers indicated that they would be spending more this year than last on equipment (both computer and other), but less on structures. This pattern is similar to the one observed in last June’s survey.
This survey has a lot extra bells and whistles which distort the core questions: (1) are orders and (2) are unfilled orders (backlog) improving? Econintersect uses unadjusted data in its analysis.
We have three months of declining opinion for new orders and unfilled orders. Unfilled orders are the indicator of an expanding economy. I would take that to the bank that “things” are getting “less good” – but neither new orders or unfilled orders are below the post recession ranges.
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