Manufacturing activity in the New York region grew for the third straight month, with new orders and shipments also gaining ground.
The New York Federal Reserve said Wednesday its November general business conditions index of manufacturing rose to 26.7 on October, up from 22.9 in September. New orders, often seen as the most important barometer of the state of the manufacturing industry, surged by 11 points, to 22.4, and the shipments index increased to 26.6 from 22.5.
After falling sharply last month, the New York fed said the prices paid index edged up slightly, but is well below the levels seen for most of the past year. The prices received index was little changed.
There was good news on the jobs scene, too, as the employee index rose to its highest level in more than a year. Thirty-six percent of respondents - a record-high percentage - reported increased employment and 11 percent reported reduced employment.
The future general business conditions index gained eight points, to 37.8, with more than half of respondents expecting business conditions to improve over the next six months. The capital spending and technology spending indexes were unchanged.
In the latest report, respondents were asked a series of questions about their cash holdings and debt financing. Replying to a question about expected changes in their firms’ overall outstanding debt, 24 percent of respondents anticipated increases, while 37 percent expected declines. In last November’s survey, these percentages were 29 percent and 24 percent, respectively.
In response to a separate question about cash holdings, 25 percent of firms said that they were currently holding higher cash balances than usual - down sharply from 40 percent in last year’s survey. Similarly, the proportion of manufacturers expecting cash holdings to increase over the next year slipped from 45 percent in last November’s survey to 37 percent this month.
The New York manufacturing report is often seen as a gauge for what the Philadelphia Fed's manufacturing index might say. The Philly index is a more established data point, and itself can be a barometer of the Institute for Supply Management's national report on manufacturing. The Philadelphia report will be released on Thursday, while the ISM report comes out at the beginning of each month.