Empire Reading Suggests Outlook For Rebound In Manufacturing Premature

Empire Manufacturing Survey (MAY)

Actual: -3.2
Expected: 0.0
Previous: 0.6

Through the month of April, US factory activity indicators - both regional and nationwide - offered preliminary evidence that the hard hit manufacturing sector would weather the economic slowdown with the help of export demand. However, the leading release of the New York-regional activity survey may signal that the positive growth through April was a mere blip in a bigger slowdown. According to the Federal Reserve Bank of New York, the Empire activity report slipped to -3.23 from a modest 0.63 print last month. April's positive reading was very welcome by economists and traders severe back-to-back declines in the indicator that posted its worst reading since records began back in 2001 and threatened to steep the necessary sector into its own recession. Looking to the details of the report, it is clear that the slowdown in domestic growth and surge in raw material prices was exacting an unwanted influence on manufacturers. The current conditions' data showed the new orders component was contracting, shipments slowed and prices paid hit a new recent record high. At the same time, prices recieved slipped while unfilled orders and inventories contracted. Given this widespread slowdown, it is clear that foriegn orders is one of the few struts for growth. Elsewhere, the outlook report (projecting expectations for the coming six months) saw a more mild price divergence, yet new orders saw a much more intense cooling. Notable improvements however were a rise in captial expenditures and employment forecasts.

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