A reading of New York-area manufacturing conditions fell swiftly and brutally in August, one that could make the likelihood of an interest-rate hike next month – or even this year – more remote. New orders fell 12 points to -15.7, and shipments fell a whopping 22 points to -13.8.
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The index for future business activity climbed seven points to 33.6 while the index for future shipments rose eight points to 33.0.
He continued, “On the face of it, the Empire State signals a plunge in the national ISM manufacturing index to about 47 from 52.7, but this is unlikely to happen; the ISM is supported by favorable seasonals during the summer”. The diffusion index is the difference between the percentage of respondents reporting increases in activity and the percentage reporting decreases. The general business conditions index sank into negative territory, dropping 19 points to -14.9.
The unfilled orders index edged up three points to -4.5.
The prices paid index fell to 7.27 from 7.45 July, while prices received fell to 0.91 from 5.32 the previous month. Labor market indicators pointed to little change in employment and hours worked.
Forward-looking indicators, however, suggest that manufacturers are expecting conditions to improve over the next six months.
The report also said the number of employees index dipped to 1.8 in August from 3.2 in July, although the positive reading still points to job growth.
Despite current weakness, New York state manufacturers still showed a fair degree of optimism about the six-month outlook, the report said.
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Indexes for future prices paid and received edged higher, but the index for future number of employees declined for a fifth consecutive month, a sign that little change in employment levels was expected in the months ahead, according to the report.
