The Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to improve in September, but at a slower pace than in the past few months. The general business conditions index fell to 14.7.
The new orders index dropped, while the shipments index declined sharply. The prices paid index, although elevated, held steady, as the prices received index rose several points. The number of employees index inched upward. Future indexes conveyed continued optimism, with the future shipments index increasing notably. The capital expenditures index fell for a second consecutive month.
This report jibes with the latest national Fed survey on industrial production:
Industrial production rose 0.2 percent in August after an increase of 0.5 percent in July. At 114.4 percent of its 2002 average, total industrial production in August was 1.7 percent above its year-earlier level. Manufacturing output fell 0.3 percent in August after five consecutive months of increases, mining output dropped 0.6 percent, but unusually hot weather contributed to an increase of 5.3 percent in the output of utilities.
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The production of consumer goods edged up 0.1 percent in August. The production of durable consumer goods decreased 1.0 percent; the drop was due mainly to a reduction of 2.1 percent in the output of automotive products. Elsewhere, the output of home electronics declined 0.2 percent; the output of appliances, furniture, and carpeting fell 0.6 percent; but the index for miscellaneous durable goods rose 0.2 percent. The production of nondurable non-energy consumer goods fell 0.3 percent; decreases in the production of foods and tobacco, of clothing, and of paper products more than offset an increase in the production of consumer chemical products. Boosted by residential sales of electricity, the index for consumer energy goods rose 3.5 percent.
The index for business equipment fell 0.2 percent in August. The output of transit equipment declined 0.2 percent, as a reduction in motor vehicle assemblies more than offset an increase in the production of civilian aircraft. The index for industrial and other equipment decreased 0.6 percent; although farm machinery increased for the second month in a row, other machinery categories registered declines. The production of defense and space equipment fell 0.6 percent.
The index for construction supplies stayed flat in August. The index for business supplies rose 1.0 percent as a result of an increase in the commercial sales of electricity; the output of non-energy business supplies was unchanged.
The production of materials rose 0.2 percent in August. Within non-energy materials, the index for durable materials fell 0.2 percent, and the index for nondurable materials fell 0.1 percent. The decrease in durable materials reflected reduced output of motor vehicle parts as well as decreases in a variety of equipment parts. Among nondurable materials, declines in the output of textiles and of chemicals more than offset an increase in the production of paper. The output of energy materials climbed 1.5 percent.
The key to these reports is from the Fed's Industrial Production report: Manufacturing output fell 0.3 percent in August after five consecutive months of increases. In addition, the Empire State Index is still at an expansionary level. My guess is we're simply seeing a natural drop after some increases.
Remember that exports are doing very well. They increased smartly in the latest report and the dollar makes exports very competitive internationally. I wouldn't expect this number to radically drop in the near future so long as the international economic scenario remains fairly strong.
