The Empire State Manufacturing Survey contracted in April as New York business conditions deteriorated in April, significantly missing economists’ expectations. with new orders falling further into the red, according to data released Wednesday by the Federal Reserve Bank of New York.
Economists surveyed by The Wall Street Journal expected the latest index to increase to 8.0. A reading above 0 indicates expansion.
The survey, which one of the first to shed light on regional manufacturing activity in the second quarter, will no doubt contribute to worries about the state of the U.S. economy.
The Empire State’s business conditions index declined to -1.19 in April, down significantly from 6.90 in March. It was the first negative reading since December. But the worst piece of data was the third consecutive month drop in orders, and that the new orders index worsened to -6.00 in April, down further from an already -2.39 in March.
The shipments index, on the other hand, actually increased to 15.23 after it fell by nearly half last month, falling to 7.93 in March from 14.12 in February.
Demand for labor is weakening considerably, with the employment index falling to 9.57, down from 18.56. The workweek index plummeted to -4.26 from 5.15.
Fewer New York state manufacturers are raising selling prices this month even with input prices increasing. The prices-received index fell to 4.26 from 8.25 in March. The prices-paid index increased to 19.15 from 12.37.
“Many of the indexes assessing the six-month outlook conveyed more optimism about future business activity than they had in February and March,” the report said.
The general business conditions expectations index for the next six months rose to 37.06 in April from 30.72 in March but it is still down from a three-year high reading of 48.35 in January.
New orders expectations rose to 33.57, up from 26.31 the month prior, but the employee expectations component fell to 22.34 from 28.87.
The Philadelphia Fed will release its survey Thursday, which economists expect to show a small increase in activity. Economists use the Fed surveys to forecast the health of the national industrial sector as revealed in the monthly manufacturing survey conducted by the Institute for Supply Management (ISM).
