By Hank Russell
General business conditions index climbed 21.5 points to 5.5 in July, its first positive reading since February, according to the most recent Empire State Manufacturing Study from the Federal Reserve of New York. That is a major improvement over the previous month, when the index was -16.0.
Of those companies surveyed, 32.4% saw higher business conditions — twice as many in June (16.9%) — while 26.9% saw lower business conditions.
New orders edged higher and shipments increased. According to the Survey, 34.9% of companies saw an increase in new orders, compared to 21.4% in June. Thirty-five percent saw more shipments, which is better than last month, when 22.7% delivered more shipments. Delivery times lengthened, and supply availability continued to worsen, with 11% seeing a decrease in supplies.
According to the Survey, during the month of July, 28.4% reported higher inventories — an improvement over June’s figure of 22%. Capital spending plans grew.
Firms remained fairly optimistic about their outlook six months from now. The index for future general business conditions edged up to 24.1, suggesting that, on the whole, businesses expect activity to increase in the months ahead. Based on data from the Survey:
- 43.2% foresee an improvement in general business conditions in July, compared to 38.4% in June
- 44.7% believe there will be a growing number of new orders in the coming months, more than June’s figure of 43.8%
- On shipments, there is less positivity than in June; 39.2% said in July they believe they will be shipping more products, while 39.8% said the same thing in June
- 21.1% are looking towards greater inventories in July, compared to 13.8% in June
- 22% expect to send more on capital. In June, the percentage was 12.8%
- However, only 4.6% foresee an increase in supply, less than June’s figure of 6.4%
“Business activity picked up slightly in New York State in July, representing the first increase in several months,” said Richard Deitz, the economic research advisor at the New York Fed. “Shipments grew, and employment picked up for a second consecutive month. Firms remained fairly optimistic about the outlook for future conditions.”