The New York Federal Reserve Bank’s Empire State Manufacturing Survey reported weaker-than-expected growth in April. The composite index of general business conditions fell from 20.2 in March to 6.6 in April. This still suggests expansionary activity in the New York region – as many of the other indicators clearly show – but it is disappointing nonetheless.
A sharp decline in the growth of shipments was the main culprit for the index’s decrease. The index for shipments decreased from 18.2 to 6.4. A similar falloff was seen in the average employee workweek figure.
Outside of those two components there was either little change from the previous month or perhaps some reasons for cautious optimism moving forward. On this latter point, the index for employment rose from 13.6 to 19.3, its fifth straight monthly gain. New orders continued to grow, albeit at a slower pace than in previous months.
Looking ahead six months, manufacturers remain mostly positive, even with the forward-looking composite index down from 47.5 to 43.1. All but 6 percent of respondents expect business conditions to either improve or stay the same in the coming months – an extremely encouraging sign. This optimism includes measures such as new orders, shipments, employment and capital spending. Manufacturers anticipate pricing pressures to continue.
In a series of special questions on finding qualified workers, manufacturers said that finding applicants with advanced computer skills was the most difficult (with a rating of 63 out of 100). Other top challenges included finding workers with basic math skills (55.4), punctuality and reliability (54.4) and interpersonal skills (53.5). Moreover, nearly 36 percent said that it was going to become more difficult to retain existing skilled workers in the coming year.
Chad Moutray is chief economist, National Association of Manufacturers.