Empire Manufacturing Signals More Weak Trends for October

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Monday’s economic reports included a weak reading on manufacturing in October from the New York Federal Reserve. This is on the heels of weak industrial production and capacity utilization reports from September. All in all, this was the first regional manufacturing report for the nation on a live reading of factory operational trends.

The Empire State Manufacturing Survey came in at −6.8 for October. Bloomberg had the consensus reading up at a gain of 1.0, and its Econoday range was set at 0.00 to 2.50. That means things were worse unilaterally versus all estimates.

Perhaps it is important to recall that this is just the New York Fed district reading. It is not a national number. Still, this is a more closely watched region than some of the other Fed districts. Another concern is that the Empire State index has been below zero for the third consecutive month.

New orders came in at −5.60, and that makes two negative readings in a row. Shipments were −0.60.

Labor market conditions remained weak, with both employment levels and the average workweek reported as lower. Employment is now at a four-month negative streak, coming in −4.70. Additional negative readings were even weaker than trend and were seen in the indexes tracking unfilled orders and inventories.

The Federal Reserve might not be happy about the outputs, but there were some gains in the input costs — rising almost six points to 22.60 in October. That is actually the highest monthly price gain in over two years. Selling prices also gained by three points to 4.70, the highest reading in just over a year.

Indexes for the six-month outlook suggested that manufacturing firms expect conditions to improve in the months ahead. The six-month outlook was positive at 36.00, but that is still roughly two points lower than in September.

All in all this is just another weak report on the manufacturing sector. The Empire Manufacturing survey has more or less been flat in 2016, not signaling great things ahead.