Manufacturing Outlook Up ‘Modestly’

NEW YORK CITY-Conditions improved “modestly” for New York manufacturers in August, the Federal Reserve Bank of New York says in its monthly Empire State Manufacturing Survey. The general business conditions index rose two points from its July level, to 7.1, the New York Fed says, with 30% of respondents saying that conditions had improved over the month.

However, indexes for both new orders and shipments dipped below zero for the first time in more than a year, reflecting a decline in activity. Employment indexes were positive and higher than last month, says the Fed.

Thirty-seven percent of manufacturers surveyed said they plan to increase capital spending over the next six to 12 months, compared to 13% that expect to reduce spending. Among respondents predicting increased capital spending, 27% said “a considerable fraction” of the expected increases reflected investment that had been postponed because of the recession, compared to 41% of respondents that gave this response in January. Another 46% of manufactured surveyed this month attributed “some” of the spending increase to the recession.

The most commonly cited factors behind increased investment were high expected growth in sales and a need to replace capital goods other than IT equipment, according to the New York Fed. Low expected sales growth, low capacity utilization and limited need to replace non-IT capital goods were the most widely cited factors behind steady or decreased capital investment in the current survey.

A year ago, the New York Fed’s general business conditions index went into positive territory for the first time since April 2008. It hit 12.1 points, its highest since the November 2007 level of 25. Five months earlier, the eight-year-old index had reached its lowest point on record, the -38.2 score recorded in March 2009.