New York Fed’s Factory Gauge Slumps Back to Contraction Territory

(Original Caption) 2/21/52-Schnectady, New York: This massive structure of shimmering stee
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Manufacturing activity in New York state contracted slightly in October, a survey by the Federal Reserve Bank of New York showed Monday.

The “Empire State” manufacturing survey’s headline business index slipped 6.5 points from the prior month to negative 4.6, the New York Fed said.

That was slightly better than the negative six forecast by economists. Readings below zero indicate a decline in activity.

The index of new orders, a key gauge of demand, fell 9.3 points to negative 4.2 in October. The shipments index declined to 1.4.

The labor market indicators remained positive. Both the measure of employment and the length of the workweek increased.

Prices continued to rise both on the cost side and the selling side but the pace of inflation on the selling side moderated.

The indices has been unusually volatile over the past few months, bouncing from deep in contraction territory to positive readings. To smooth out the month-to-month gyrations, some analysts have been looking to three and six month moving averages. The three month average general activity reading fell to negative 7.2 from negative 5.3 in the prior month and negative 3.8 in August, suggesting a downward trend for the index.  The six-month average is negative 7.6.

The long-term average is positive 7.4.

Looking ahead, firms remained “relatively optimistic” about future conditions. Less than half of respondents expect conditions to improve over the next six months. New orders and shipments are seen as rising, though less so than last month, and employment is expected to grow.

The capital spending index was little changed at 9.6, suggesting that capital spending plans remained “somewhat weak,” the Fed said.



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