(Kitco News) - Manufacturing activity collapsed at the start of the new year, with the New York Federal Reserve’s Empire State Survey falling to its lowest level since the economy was shut down due to the global pandemic in early spring of 2020.
The regional central bank said its manufacturing survey dropped to -43.7, down sharply from December’s reading at -14.5. The data significantly missed economist expectations as consensus forecasts called for a rise to -4.9.
“New York manufacturing activity fell sharply in January following a significant decline in December. While the survey’s headline index has fluctuated in recent months, this outsized drop suggests January was a difficult month for New York manufacturers, with employment and hours worked also contracting,” said Richard Deitz, Economic Research Advisor at the New York Fed
The gold market is seeing little reaction to the disappointing economic data. While off its lows, spot gold remains under pressure, last trading at $2,038.50 an ounce, down 0.77% on the day.
The components of the report show broad-based weakness in the region’s manufacturing sector, even as inflation pressures rise.
The report said the New Orders Index dropped to -49.4, down from December’s reading of -11.3; meanwhile, the Shipments Index dropped to -31.3, down from -6.4.
The one bright spot was the labor market, which showed some improvement even as it remains in contraction territory. The report said that the Employment Index rose to -6.9, up compared to December’s reading of -8.4.
The report also showed stubborn inflation pressures, with the Prices Paid Index rising to 23.2, up from the previous reading of 16.7. The inflation numbers are seen as a short-term negative for gold as it could force the Federal Reserve to maintain its aggressive monetary policies longer than expected.
Neils Christensen
Neils Christensen has a diploma in journalism from Lethbridge College and has more than a decade of reporting experience working for news organizations throughout Canada. His experiences include covering territorial and federal politics in Nunavut, Canada. He has worked exclusively within the financial sector since 2007, when he started with the Canadian Economic Press. Neils can be contacted at: 1 866 925 4826 ext. 1526 nchristensen at kitco.com @KitcoNewsNOW
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