After last month’s unexpected slide in the Empire Fed survey, which tumbled to a multi-month low of -6.8, moments ago the New York Fed reported in November business activity stabilized in New York State, with headline general business conditions index climbed out of negative territory for the first time in four months, rising eight points to 1.5 above the expected -2.5. The new orders and shipments indexes also turned positive, rising to 3.1 and 8.5, respectively.
According to the report, manufacturing firms in New York State reported that business activity was essentially flat in November. Twenty-seven percent of respondents reported that conditions had improved over the month, while 25 percent reported that conditions had worsened. The new orders index climbed nine points to 3.1, indicating that orders edged higher, and the shipments index rose nine points to 8.5, pointing to an increase in shipments.
On the flipside, however, labor market conditions remained weak, with the number of employees and average workweek indexes both declining to a -10.9 level. Furthermore, the unfilled orders index inched down to -12.7, and at -5.5, the delivery time index signaled shorter delivery times. The inventories index fell eleven points to -23.6, pointing to a marked decline in inventory levels: this was the lowest print going back at least to the start of 2012.
A closer look at the employment slowdown reveals that both employment indexes remained negative in November. The index for number of employees dropped six points to -10.9, “a sign that employment levels were contracting, and the average workweek index, little changed at -10.9, pointed to a decline in hours worked.” The prices paid index fell seven points to 15.5, indicating that input price increases slowed, and the prices received index edged down to 2.7, signaling that selling prices were marginally higher.
Finally, looking ahead, indexes for the six-month outlook suggested that respondents were somewhat less optimistic about future conditions than they were last month. The index for future business conditions retreated six points to 29.9. The index for future new orders and the index for future shipments fell to similar levels. Indexes for future employment and the future average workweek, at 10.9 and 10.0, respectively, indicated that firms expected to expand employee rolls and hours worked in the months ahead. Indexes for future prices suggested that firms anticipated an increase in both input prices and selling prices over the next six months. The capital expenditures and technology spending indexes continued to point to modest increases in spending for both categories.
Overall a mixed report, however one which pointed to some hope the recent quarter of weakness in NY State may be finally turning over, if unclear for how long.
For a much better read, keep an eye on next month’s report which will incorporate the Trump election result.
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