Empire Manufacturing Shrinks

Manufacturing in the New York area unexpectedly contracted in August for the first time in 10 months, indicating U.S. factories are burdened by the global economic slowdown.

The Federal Reserve Bank of New York’s general economic index fell to minus 5.9 this month from 7.4 in July. The median estimate in a Bloomberg survey of economists was 7.0. Readings less than zero signal contraction in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.

A slowdown in demand from consumers in the first half of the year, limited capital spending and a build-up in inventories gives factories little reason to boost production. Orders for the region’s manufacturers fell to the lowest level in almost a year, showing the industry that spurred the recovery from recession is facing a bigger hurdle from a weaker global economy.

“The outlook is not particularly favorable,” Millan Mulraine, a senior U.S. strategist at TD Securities Inc. in New York, said before the report. “Slowing global growth momentum will certainly eat into the global demand for U.S. exports and manufacturing in particular.”

Stock-index futures held losses after the figures, with the contract on the Standard & Poor’s 500 Index falling 0.2 percent to 1,398.4 at 8:32 a.m. in New York.

Estimates in the Bloomberg survey of 56 economists ranged from minus 2 to 10.

The Empire State gauge of new orders dropped to minus 5.5 in August from minus 2.7 the prior month, while the shipments measure fell to 4.1 from 10.3.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell