NY Fed: The Recovery Sputtered In October

The New York Fed’s Empire State survey confirms what a lot of other on-the-ground economic reports (like rail) are suggesting, that the recovery, while still alive, is inconsistent, and certainly not going in a straight line.


The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved in November, but at a somewhat slower pace than in October. The general business conditions index fell 11 points, to 23.5. The indexes for new orders and shipments posted similar declines. Pricing pressures eased, with the prices paid index positive but lower than last month and the prices received index rising to a level just below zero. Employment indexes fell from October’s elevated levels, remaining slightly positive. Future indexes conveyed an expectation that activity and employment would improve in the months ahead and that both input and selling prices would increase significantly.

In a series of supplementary questions (see Supplemental Reports tab), respondents were asked about their cash holdings and debt financing. More than 40 per cent of manufacturers expected cash holdings to increase over the next year, while 24 per cent expected them to decline—in sharp contrast to results from an identical survey conducted a year ago, when more manufacturers had expected cash holdings to decline than to rise. Respondents were also asked about expected changes in their outstanding debt; in the current survey, 39 per cent of manufacturers said that they anticipated declines, while just 16 per cent expected increases—again, a noteworthy change from last year’s survey, when nearly as many respondents had anticipated increases as decreases in debt. In response to a related question on current cash holdings, 34 per cent of firms said that they were currently holding higher than usual (excess) cash balances, up from 20 per cent in the November 2008 survey.

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