NY factory activity contracts 5th month in row

An example of Lakeland Industries protective garments. The

An example of Lakeland Industries protective garments. The Ronkonkoma-based manufacturer said "fiscal cliff" budget gridlock is having an effect on its production. “We do see the U.S. economy slowing down because of this fiscal cliff dilemma,” Lakeland president and chief executive Christopher J. Ryan said in a Dec. 13 conference call. Photo Credit: Lakeland Industries

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Manufacturing activity in New York contracted for the fifth month in a row in December, according to the Empire State Manufacturing Survey. The decline, however, could not be attributed to superstorm Sandy as New York manufacturers said the storm's effect on business has mostly dissipated.

The monthly report of manufacturing activity compiled by the Federal Reserve Bank of New York said the general business conditions index was still negative -- indicating a contraction in manufacturing -- and fell about three points to negative 8.1 this month.

The continued decline is a result of the global economic slowdown, as Europe and Japan enter recessions and Chinese commerce stagnates, said Pearl Kamer, chief economist of the Long Island Association.

Although some manufacturers -- mainly in the downstate area -- said the effects of Sandy brought down revenue in October and November, the storm was no longer expected to be a factor in December business.

The new orders index fell seven points to negative 3.7, after rising above zero last month for the first time since June. The negative reading points to a decrease in demand.

Lakeland Industries, a maker of protective work clothing in Ronkonkoma, attributed the decrease in demand to the impending "fiscal cliff."

Chief executive Christopher Ryan said in a Dec. 13 conference call that the company is seeing domestic and overseas firms hold back on spending as lawmakers debate how best to avert the fiscal cliff -- about $600 billion in tax increases and budget cuts set to begin in early 2013.

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That hesitation could affect overall manufacturing activity, as well as jobs and business in other sectors, Kamer said.

"Domestic businesses are holding off on hiring and investments until they see what's going to happen with [the] fiscal cliff," she said. "Just the uncertainty, not knowing what business taxes and regulations will look like . . . Businesses will be status quo for a while, and this hurts manufacturers because they aren't getting the orders."

Earlier this month, the Institute for Supply Management reported that the national factory index fell to 49.7 in November from 51.7 in October. A reading below 50 indicates a decline in activity.

With Bloomberg News

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