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December 17, 2012

Just Released: December Empire State Manufacturing Survey

Bram and Richard Deitz

Issued this morning, the December 2012 Empire
State Manufacturing Survey
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

     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.

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