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According to a report from the Federal Reserve Bank of New York, business activity grew only modestly in the state of New York in July. Companies responding to the July 2017 Empire State Manufacturing Survey delivered a 10 point drop in the growth rate, with the general business conditions index falling to 9.8 in July from 19.8 in June. The number is not only below the Bloomberg consensus of 15.0, but it is lower than the range of 10.0 to 18.3 from all the economists polled by Econoday.

There are some larger national issues that may explain this drop in growth, but the weakness was also felt in many of the individual areas. Thirty percent of the respondents reported that conditions had improved over the month, and twenty percent of respondents reported that conditions had worsened in July. Indexes assessing the six-month outlook (see below) suggested that firms remained positive about future conditions, albeit with a less optimistic tone than in June.

The new orders index fell by 5 points to 13.3 and the shipments index fell by 12 points to 10.5, which suggests that orders and shipments continued to grow but at a slower pace than in June. Also, according to the New York Fed, delivery times (at 4.7) continued to lengthen at the same time that inventory levels were fairly steady, falling to 2.4 in July.

On a national level there are continuing reports of a tightening labor market, but the New York State region’s labor market indicators pointed to a small increase in employment, while there was no change in hours worked. The Fed report said:

The index for number of employees fell for a third consecutive month, though it remained positive at 3.9—a sign that employment was growing, but not as rapidly as in earlier months.

Input prices and selling prices were up by roughly the same amount as in June. The Fed report said:

The prices paid index was little changed at 21.3, as was the prices received index at 11.0, suggesting that the pace of price increases held steady.

Perhaps the most important issue to consider now is the economic outlook. This is generally a six-month outlook and is in theory what business executives are basing their business decisions around. On this front, the New York Fed’s outlook component of the report continued to show some weakness. It said:

The index for future business conditions fell seven points to 34.9, and the index for future new orders fell nine points to 33.4. Employment was expected to increase modestly, though the average workweek was expected to decline slightly. The capital expenditures index slipped to 15.0, and the technology spending index was 11.8.

All in all, this is an economic report that should be viewed as showing growth that is much more modest than robust. It also just one regional report, rather than a live national economic snapshot.

As a reminder of how this survey is conducted, it is sent out by the New York Federal Reserve Bank on the first day of each month to the same pool of roughly 200 CEOs or presidents of manufacturing companies in New York State. The survey’s numbers are generally based on about 100 responses that are received.