Empire struggles

The Empire Manufacturing Index takes the temperature of a sliver of the manufacturing sector, as it looks at conditions in just one state, New York. 

The survey is important and does capture the attention of economists because it provides the first look at manufacturing in the current month.  In the wake of the Fed’s action and it’s statement last week that took note of the slowdown, any signs that the soft patch may finally be over, or conversely, any indications that another recession may be setting in, will be closely sought after.

The Empire was definitely mixed.  On the one hand, the headline number improved by two points to 7.1.  A reading above zero indicates expansion.

However, both new orders and shipments fell below zero for the first time in a year, underscoring that the slowdown in housing and consumer spending continues to spread to manufacturers.

Softness in prices was also a telltale sign that conditions have been moderating. Continuing its downward trend for a third consecutive month, the prices paid index fell 5 points to 20.0, suggesting that the pace price increases at the early stages of production is still slowing.

The prices received index, at -2.9, remained negative for a second consecutive month, highlighting the difficulty that manufacturers are having when it comes to raising prices. 

In addition, the portion of the survey the looks at future conditions slipped about 6 points to 35.7, the lowest reading in over a year.

All in all, not very encouraging but not conclusively signaling an impending slump.