(Kitco News) - Manufacturing activity in the New York region showed a massive decline this month, defying expectations and falling sharply into contractionary territory, according to the latest figures published by the New York Federal Reserve.
The regional central bank announced on Wednesday that its Empire State manufacturing survey came in at -12.6 in January, after posting a 2.1 print in December. The data was far worse than expectations, as consensus forecasts called for an improvement to 4.5.
“Business activity declined in New York State in January,” the report said. “The headline general business conditions index fell fifteen points to -12.6. New orders fell modestly, and shipments were little changed. Delivery times were slightly longer, and supply availability was unchanged. Inventories grew slightly. Labor market indicators pointed to steady employment levels but a shorter average workweek. Both input and selling price increases picked up.”
Spot gold shot up to a fresh session high of $2,693.46 in the moments after the release, which came out at the same time as the December CPI report. Spot gold last traded at $2,688.30 per ounce for a gain of 0.40% on the session.
The components of the report showed conditions weakening in most areas of the region’s manufacturing sector.
“The new orders index fell thirteen points to -8.6, pointing to a modest decline in orders, and the shipments index retreated eleven points to -1.7, indicating that shipments were little changed,” the report noted. “Unfilled orders continued to fall. The inventories index remained positive at 5.8, a signal that inventories grew. The delivery times index came in at 3.5, suggesting that delivery times were slightly longer, and the supply availability was zero, a sign that supply availability was unchanged.”
“The index for number of employees rose eight points, but held near zero at 1.2, suggesting that employment levels were steady,” they added. “The average workweek index remained negative at -15.1, pointing to a significant decline in hours worked.”
After dipping last month, both price indexes rose in January. “The prices paid index increased eight points to 29.1, and the prices received index rose five points to 9.3,” the report said.
But despite the weakening data, firms grew more optimistic that conditions would improve in the months ahead. “The index for future business activity climbed ten points to 36.7, with fifty-three percent of respondents expecting conditions to improve over the next six months,” they wrote. “Employment is expected to grow and supply availability is expected to be steady. Capital spending plans remained modest.”
