Manufacturing in New York Area Cools as Sales, Hiring SlowBen Schenkel
Manufacturing in the New York region grew at a slower pace than projected in October as sales and hiring cooled.
The Federal Reserve Bank of New York’s general economic index fell to 1.5, a five-month low, from 6.3 in September. Positive readings signal expansion in New York, northern New Jersey and southern Connecticut. The median estimate in a Bloomberg survey of economists called for a reading of 7.
The gauge dropped even as orders climbed to the highest level in seven months, indicating production will probably pick up next month. The budget and debt-ceiling standoff in Washington may have shaken confidence within manufacturing, which makes up about 12 percent of the economy.
“A lot of manufacturers’ uncertainty can be blamed on the fiscal brinkmanship, rather than a deterioration in fundamentals,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who projected the index would drop to 1. “The improvement in new orders is reason for optimism.”
Stock futures were little changed, after a four-day rally took the Standard & Poor’s 500 Index to a three-week high, as investors weighed budget-talk developments. The contract on the S&P 500 maturing in December dropped less than 0.1 percent to 1,703 at 8:55 a.m. in New York.
October’s estimates for the so-called Empire State index in the Bloomberg survey of 51 economists ranged from minus 2 to 10. The headline reading is a separate question rather than a compilation of subcomponents and is therefore sometimes considered a gauge of underlying sentiment.
The measure of new orders increased in October to 7.8, the highest since March, from 2.4 the previous month. A gauge of shipments declined to 13.1 from a 16-month high of 16.4 in September. Factory managers said inventories were little changed this month after climbing in September for the first time in more than a year.
“Stronger orders and weaker inventories is not exactly a bad combination for the production outlook,” Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, said in a report.
The index of prices paid was little changed at 21.7 compared with 21.5, while prices received decreased to 2.4 from 8.6. A measure of factory employment weakened to 3.6 from 7.5.
Factory executives in the New York Fed region viewed the future with a bit more optimism. The barometer of their outlook six months from now rose to 40.8, the highest since April 2012, from 40.6.
Economists monitor the New York report and Philadelphia Fed factory readings, due on Oct. 17, for clues about the Institute for Supply Management figures on U.S. manufacturing. The national report is scheduled for release Nov. 1.