Just Released: December Empire State Manufacturing Survey
Issued this morning, the December 2012 Empire State Manufacturing Survey report suggests that manufacturing activity continued to decline modestly in New York State, with only moderate lingering effects from superstorm Sandy. The headline general business conditions index, which gives a broad reading on overall manufacturing activity for the state, remained negative for a fifth consecutive month. The level of this index has fluctuated between -5 and -10 over the five-month interval, and has changed little since the storm. Specific activity indexes for December were mixed. The measure for new orders dipped below zero but only slightly, while the shipments index remained in positive territory. However, the indexes for both the number of employees and the average workweek were more negative.
December responses from manufacturers in downstate New York generally showed more widespread declines than those from upstate establishments—especially on the new orders and employment measures—suggesting that superstorm Sandy has had some lingering negative effects. Still, responses from upstate businesses, which represent more than two-thirds of the respondent pool, were generally negative as well. This part of New York was not directly affected by the storm, although a number of manufacturers noted that they were affected indirectly—some positively, some negatively.
Firms were also asked specifically about the extent to which the storm had affected their revenues in October and November, as well as what effect they anticipated in December. While upstate respondents, on average, reported virtually no net effect in any of the three months, the average downstate firm reported negative impacts of roughly 7 percent in October and about 5 percent in November. For December, however, downstate firms anticipated a neutral net effect as the region recovered from the storm.
Finally, in response to a series of supplementary questions on past and expected changes in costs, surveyed manufacturers said that prices paid overall were up 3.7 percent, on average, in 2012, and that this rate would probably edge up to 4.0 percent in 2013. As usual, employee benefits remained the biggest driver of the increases, with the average panelist indicating that prices paid in this category were expected to jump 7.2 percent next year after rising by 6.4 percent in 2012. In contrast, energy prices were expected to remain tame, rising a little more than 2 percent in 2013, following a roughly 1½ percent increase in 2012. It would appear, however, that firms do not intend to pass most of their cost increases along to customers: the average manufacturer in our survey planned to raise selling prices by just 1 percent over the next year.
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.
Jason Bram is a senior economist in the Research and Statistics Group.
Richard Deitz is an assistant vice president in the Group.