Weakness Persists in New York Fed Manufacturing

The only key economic report for Monday was the Federal Reserve Bank of New York’s Empire Manufacturing Survey. What was anticipated to be a negative report for the month of November was even more negative than expected.

The November 2015 Empire State Manufacturing Survey showed that the General Business Conditions Index came in at -10.74. Bloomberg had its consensus estimate at -5.0, but the October reading was -11.36. What really stands out here is that the New York Fed’s report indicates that business activity declined for the fourth consecutive month in that Fed district. Some 19% of respondents reported that conditions had improved over the month, but 29% had reported that conditions had worsened.

New orders and shipments also declined, although at a slower pace than last month. Price indexes suggested that input prices increased slightly, while selling prices were slightly lower. Labor market conditions continued to deteriorate, with survey indicators pointing to a decline in both employment levels and hours worked. Indexes for the six-month outlook were little changed from last month and suggested that optimism about future conditions remained tepid, even though employment is expected to increase.

Individual readings were listed as follows:

• The new orders index rose by seven points, but at -11.8 it pointed to an ongoing decline in orders.
• The shipments index rose by 10 points to -4.1, signaling that shipments also declined.
• The unfilled orders index was down by three points to -18.2.
• Delivery times were shorter again this month, with the delivery time index holding steady at -10.9.
• The inventories index was down by 10 points to -17.3, indicating a significant reduction in inventory levels.
• The prices paid index rose to 4.6, suggesting that input prices increased somewhat after holding steady last month.
• The prices received index remained negative at -4.6, indicating that selling prices declined for a third straight month.

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Another round of negativity was seen in the New York District’s employment numbers. These were listed as follows:

Labor market conditions continued to weaken. The index for number of employees was little changed at -7.3, a sign that employment levels fell for a third consecutive month, and the average workweek index moved down seven points to -14.6, its lowest level since mid-2011.