After hovering around zero since April, the general business conditions index dropped nineteen points to -14.9, its lowest level since April 2009. A reading above 0 indicates expansion.
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“Given the limited manufacturing base in the New York area, we take this morning’s negative surprise with a grain of salt”, Jesse Hurwitz, an economist at Barclays Capital, said in a research note.
The steep drop by the headline index came as the new orders index slumped to a negative 15.7 in August from a negative 3.5 in July.
Readings for unfilled orders, delivery time, inventories and average employee workweek also were negative, and the index for prices received just barely stayed positive at 0.9 from 5.3 in July.
Economists polled by Reuters had expected the index to rise to 5.00 this month. Inventories were lower, with the index falling sharply to – 17.3 from -8.51 in July. A measure of employment slipped to 1.8 from 3.2, suggesting companies are adding fewer workers.
While indexes for future activity fell short of the higher levels recorded throughout 2014, they still showed a fair degree of optimism about the six month outlook.
The survey’s index on future business conditions, however, rose to 33.64 from 27.04 in July. The index for future number of employees declined for a fifth consecutive month, reaching 3.6-a sign that little change in employment levels was expected in the months ahead.
The New York Fed survey is the first monthly factory report released by regional Fed banks.
Selling pressure waned not long after the open, however, and stocks rebounded amid the release of a separate report from the National Association of Home Builders showing a modest uptick in homebuilder confidence.
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U.S. manufacturers have been struggling with a variety of headwinds, including weak overseas economies in Europe and China, that have cut into exports.
