The latest NY Fed Empire Manufacturing survey adds fuel to the double-dip viewpoint.
The Empire State Manufacturing Survey indicates that conditions for New York manufacturers leveled off in December, following four months of improvement. The general business conditions index fell 21 points, to 2.6. The indexes for new orders and shipments posted somewhat more moderate declines but also moved close to zero. Input prices picked up a bit, as the prices paid index rebounded to roughly its November level; however, the prices received index moved further into negative territory, suggesting that price increases are not being passed along. Current employment indexes slipped back into negative territory. Future indexes remained well above zero but signaled somewhat less widespread optimism than in recent months. Indexes for expected prices paid and received declined moderately but remained well above zero.
In a series of supplementary questions (see Supplemental Reports tab), manufacturers were asked about recent and expected changes in the prices paid for various categories of goods and services. Respondents predicted that prices paid for most budget categories would increase by 2 to 3 percentage points more in 2010 than in 2009. Prices paid overall were reported to have risen by 2.5 per cent in 2009 and were expected to rise by 4.2 per cent next year. The average respondent anticipated an increase of 2.1 per cent in both wages and costs of outside services, 7.6 per cent in employee benefit costs, and 3.5 per cent in nonmedical insurance costs. In response to a separate question, the average respondent saw a roughly 7 per cent chance that prices paid would decline by more than 2 per cent; in last year’s survey, the probability of such a decline was pegged at 19 per cent.