New York state business conditions failed to improve in September after unexpectedly tumbling in August, despite economists’ expectations for a rebound.
The Empire State’s business conditions index edged up to -14.7 this month from -14.9 in August, according to the Federal Reserve Bank of New York. The August reading, down from 3.86 in July, was the lowest since 2009. The September decline marked the fourth in six months.
Economists surveyed by The Wall Street Journal expected the gauge to improve to -2.0. A reading above zero reflects expansion, whereas a reading below that level denotes contraction.
While some subindexes improved, most remained firmly in contractionary territory, according to the New York Fed.
New orders improved to -12.91 from -15.70 in August, and shipments rose to -7.98 from -13.79. Inventories declined to -18.56 from -17.27.
Labor-market conditions worsened, the report said, with the index measuring the number of employees falling below zero, to -6.19, for the first time in more than two years. That is as the average workweek fell about eight points to -10.31.
Meanwhile, manufacturers’ selling prices declined, while prices paid slid to the lowest levels since the recession.
As business activity declined and labor-market conditions deteriorated, manufacturers’ optimism about future conditions waned. The index for future business conditions dropped 10 points to 23.21, the survey showed.
Amid expectations for falling orders and lower pricing power over the next six months, respondents are planning for lower capital spending. The subindex measuring future spending plans decreased to 11.34 from 17.27 in August, though it remains solidly above the zero mark. The index for future number of employees, meanwhile, snapped a five-month decline and doubled to 7.22 in September.
The New York Fed survey is the first monthly factory report released by regional Fed banks. Economists use the Fed surveys to forecast the health of the national industrial sector as captured in the monthly manufacturing report released by the Institute for Supply Management. The Philadelphia Fed is scheduled to release its own regional survey later this week.