The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved in May, but at a slower pace than in April. The general business conditions index fell ten points to 11.9. The new orders index declined five points to 17.2, and the shipments index slipped three points to 25.8. The inventories index climbed to 10.8, its highest level in a year. The prices paid index rose to 69.9, its highest level since mid-2008, while the prices received index held firm at 28.0. Future indexes continued to convey a high level of optimism about the six-month outlook, although prices are widely expected to rise.
The prices paid index rose sharply, indicating that price increases accelerated over the month. The index advanced twelve points to 69.9, its highest level since mid-2008, with roughly
70 percent of respondents reporting price increases, and none reporting price declines. This index has moved up a cumulative fifty points over the past six months. The prices received index, at 28.0, was one point higher than in April; its rise over the past six months has paralleled the upward trend in the prices paid index. The index for number of employees inched up to 24.7, indicating that employment levels expanded over the month, and the average workweek index rose thirteen points to 23.7, a multi-year high.
Last month we saw three regional manufacturing indexes drop, so this month's data is especially important. While this number is still positive, it did drop. In addition, the prices paid number is extremely high, indicating this is an issue. Higher input prices may put downward pressure on hiring plans.
However, the optimism index is also very high, telling us that owners think the current issues are not altogether damaging to the longer picture.