Business conditions for New York-area manufacturers continued to decline for a third consecutive month, according to the Federal Reserve Bank of New York, as a shipments index fell to its first negative reading in more than a year.
The New York Fed surveys manufacturers throughout its territory, which includes New Jersey and Fairfield County.
Empire State Manufacturing Survey indexes rose that assess general business conditions and new orders, but remained in negative territory, while employment data weakened.
Indexes for the six-month outlook suggested that conditions were expected to improve, the Fed stated, although the level of optimism among manufacturers remained low relative to earlier this year.
More respondents reported rising than declining borrowing needs over the past year, 26 percent to 17 percent. Looking ahead to the next 12 months, 24 percent of manufacturers indicated that they expect borrowing needs to be higher a year from now, whereas just 10 percent anticipate lower borrowing needs.
While the majority of respondents reported no change in credit availability ”“ over either the past three months or the past 12 months ”“ almost twice as many manufacturers reported tightening credit compared to those saying credit is easing.
Speaking at the National Association for Business Economics annual meeting in New York City on Monday, Oct. 15, New York Fed President William Dudley said the recovery has been slower than expected for several reasons.
“One possibility is that the negative dynamics of a post-bubble environment are even more potent than had been appreciated,” Dudley said. “For example, we have found significant shortcomings in those institutional structures available to support the workout of the overhang of mortgage debt in an efficient and timely manner.
“A second reason may be the series of additional negative shocks experienced since the initial phase of the financial crisis,” Dudley continued. “The largest of these relate to the crisis in the eurozone, but one could also add the periodic commodity price shocks; the disruptive impact of the tragic Japanese earthquake and tsunami on global trade and production; and the effect of the uncertainties around the impending fiscal cliff on hiring and investing.”
Dudley added policymakers may have overestimated the capacity for fiscal policy to continue to provide support to growth until “a vigorous recovery was achieved,” in his words.
