By Xavier Fontdegloria
Factory activity in the New York state picked up in July after stagnating the previous month, but the short-term outlook for business conditions deteriorated sharply, according to a survey from the Federal Reserve Bank of New York released Friday.
The Empire State Manufacturing Survey’s general business conditions index rose to 11.1 in July from minus 1.2 in June, beating economists’ consensus forecast of minus 2 in a poll by The Wall Street Journal.
The indicator, which is based on a survey of manufacturing sector’s firms in the New York area, signals that factory activity increased modestly as a reading above zero suggests expansion.
Around 34% of firms polled in the survey said that business conditions improved in July compared with the previous month, and 23% said that conditions deteriorated.
Demand for goods increased, data from the survey showed. The new orders index rose to 6.2 from 5.3 the previous month, suggesting a slight rise in new orders, and the shipments index climbed to 25.3 from 4.0, in a sign of a sharp pickup in shipments.
The index for number of employees fell slightly to 18.0 from 19.0 a month earlier, but continued to suggest broad employment gains.
Supply-chain bottlenecks showed further signs of easing. The unfilled order index fell to minus 5.2 from minus 4.3, in a sign of declining unfilled orders. The delivery times index decreased to 8.7 from 14.5, the lowest reading since early 2021. Inventories continued to expand, according to the survey.
Inflation pressures persisted, but eased markedly over the month. The prices paid index fell to 64.3 from 78.6, and the prices received index declined to 31.3 from 43.6, indicating a deceleration in price increases.
Respondents turned pessimistic over the short-term outlook for business and they expect activity to decline over the next six months, a sentiment only expressed three other times in the survey’s history, the NY Fed said.
The index for future business conditions fell sharply to minus 6.2 in July from 14.0 in June. Orders are seen stabilizing, shipments edging up slightly, delivery times and unfilled orders are expected to decline in the short-term, and inflation pressures are likely ease further, the report said.
Write to Xavier Fontdegloria at [email protected]
