Manufacturing in the New York region expanded at a slower-than-expected pace in August as companies felt the effects of weak demand.
The Federal Reserve Bank of New York’s general economic index fell to 8.2 from 9.5 last month. Readings greater than zero signal expansion in New York, northern New Jersey and southern Connecticut. The median projection in a Bloomberg survey of 50 economists called for a reading of 10.
Factories continue to weather the effects of the U.S. fiscal drag and weak overseas demand. The outlook may improve later in the year amid gains in construction, auto sales, and consumer spending. Overseas, the euro area’s economy emerged from a record-long recession in the second quarter, providing another potential boost to U.S. manufacturers, which account for about 12 percent of the economy.
“Europe’s not going to be as big a drag as it has been in the past. The negatives are getting smaller across the board,” Josh Dennerlein, an economist at Bank of America Corp. in New York, said before the report. “We’ll get a pickup in the back half of the year on improving U.S. growth.”
Estimates in the Bloomberg survey of 50 economists for August data ranged from 1 to 12.5. The index rose for the third straight month.
The Empire State gauge of new orders decreased to 0.3 in August from 3.8 the previous month. A measure of shipments fell to 1.5 from 9 the prior month.
The index of prices paid rose to 20.5 from 17.4, while prices received climbed to 3.6 from 1.1.
A measure of factory employment jumped to 10.8 from 3.3.
Factory executives in the New York Fed region were more optimistic about the future. The gauge measuring the outlook six months from now climbed to 37.4 from 32.
Economists monitor the New York report and Philadelphia Fed factory readings, due later today, for clues about the Institute for Supply Management figures on U.S. manufacturing. The national report is scheduled for release Sept. 3.
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