The New York Federal Reserve Bank’s Empire State Manufacturing Survey bounced back in May after a disappointing April. The composite index of general business conditions jumped from 6.6 in April to 17.1 in May, nearing the levels that it achieved earlier in the year. Equally important to perceptions about the larger economy, the various subcomponents were higher across-the-board, reflecting modest growth among manufacturers.
The largest increase occurred in the index for shipments, which rose from 6.4 to 24.1. The shift in the monthly shipment figures was the result of nearly 47 percent of respondents saying that their shipments were higher this month than last.
Other measures also increased, but less dramatically. The index for new orders, for instance, rose from 6.5 to 8.3. Inventories, the number of employees and the average workweek were all higher, as well.
Interestingly, though, manufacturers in the New York region were less optimistic about the next six months than in past surveys. The forward-looking general business conditions index fell from 43.1 to 29.3 for the month. This mirrored similar drops in new orders, shipments, employment and capital expenditures.
With that said, it is hard to get too worked up over this, especially since nearly half of respondents expect for new orders to be higher. In addition, these index levels still suggest a relatively brisk pace of growth moving forward. The drop, though, does suggest increased anxieties.
Those taking the survey were also asked about pricing pressures. They said that input prices grew by 3.6 percent on average over the past year, with a 3.5 percent gain expected this year. This reflects a degree of moderation, though, from the 8.1 percent increase that respondents cited in May 2011 at the height of a run-up in raw material and energy prices. As for selling prices, they are growing around 2 percent.
Chad Moutray is chief economist, National Association of Manufacturers.