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U.S. March Empire State Manufacturing Index (Text)

March 15, 2012

Following is the text of the Empire State Manufacturing Index.

The March Empire State Manufacturing Survey indicates that manufacturing activity in New York State expanded at a moderate pace. The general business conditions index was little changed at 20.2, its fourth consecutive positive reading. The new orders and shipments indexes were both positive but slightly lower, indicating continued growth in orders and shipments, though at a somewhat slower pace than in the last month. The prices paid index rose a steep 25 points to 50.6, its highest level since summer 2011, and the prices received index was positive but two points lower than in February. Employment indexes rose and indicated continued growth in both employment levels and the average workweek. Indexes for the six-month outlook, though generally somewhat lower than they were last month, conveyed a high degree of optimism, and the capital spending index rose to its highest level in more than a year.

On a series of supplementary survey questions, respondents were asked about recent and expected changes in their firms’ borrowing needs and credit availability. Parallel questions were asked in October 2011, March 2011, and earlier surveys. While a majority of respondents in the latest survey reported no change in borrowing needs, a larger proportion than in earlier surveys indicated a rising need to borrow. Looking ahead, 30 percent of manufacturers indicated that they expect borrowing needs to be higher a year from now, whereas just 13 percent anticipated lower borrowing needs. Respondents were evenly split about both past and expected changes in credit availability. Firms also reported little change in borrowing costs, on balance, over the past three months.

Moderate Pace of Growth Continues

The general business conditions index was little changed in March and, at 20.2, indicated a continued moderate pace of growth in business activity for New York State manufacturers. One-third of respondents reported that conditions had improved, while just 13 percent reported worsening conditions. The new orders index inched down three points to 6.8, indicating a modest growth in orders. The shipments index fell five points to 18.2, revealing a continued increase in shipments, though at a slower pace than in February. The unfilled orders index rose six points to -1.2; though negative, this is the highest value for the index since June 2011. The delivery time index rose six points to 7.4, indicating that delivery times lengthened. The inventories index rose to zero, suggesting that inventory levels held steady.

Input Costs Rise Sharply

The prices paid index rose a steep 25 points to 50.6 in March, suggesting that manufacturers observed a sharp increase in input costs. The last time the index was this high was in summer 2011. The prices received index inched down two points to 13.6, suggesting a modest increase in selling prices. Employment indexes were positive and higher than they were last month, indicating a continued improvement in labor market conditions. The number of employees index rose two points to 13.6, and the average workweek index climbed 11 points to 18.5.

Outlook Is Optimistic, with Strong Growth Seen in Capital Spending

Indexes for the six-month outlook were generally somewhat lower than they were last month, but held at levels that conveyed a high degree of optimism. The future general business conditions index dipped three points to 47.5, the future new orders index also fell three points, to 42.0, and the future shipments index was down six points, reaching 43.2. The future prices paid index rose four points to 66.7, with two-thirds of respondents expecting to pay higher prices in the months ahead. The future prices received index fell two points to 32.1. The future number of employees index rose three points to 32.1, and the future average workweek index rose two points to 21.0. The capital spending index was slightly higher at 32.1, its highest level in more than a year, and the technology spending index rose six points to 24.7.

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