FXStreet (Edinburgh) – Analyst at ING Bank Rob Carnell evaluated the recent miserable result of the Empire State manufacturing index.
Key Quotes
“The latest Empire manufacturing survey is a good reminder of why we don’t pay much attention to regional activity surveys – to be charitable, they are a bit choppy. In this case, the Empire survey fell from a moderate reading of 3.86, to -14.92. And you have to go right back to 2009 and the heart of the financial crisis to find anything this bad”.
“For what it is worth, and in our opinion, it is not a lot, the new orders and shipments series utterly collapsed this month. Inventories, which had been heading down, fell further, as did the average workweek (in complete contrast to the last labour market report). Interestingly, despite this apparently dismal; backdrop, although the index of employees fell slightly, it remained positive. Odder still, the outlook for six-months’ time improved to 33.64 from 27.04, with new orders and shipments then expected to be strong or picking up. We doubt there is much merit in these expectations either”.
“There will be a bunch of other regional activity surveys out in the coming weeks. Even when they all point in the same direction, this need not give the correct steer for the national ISM survey, or for the strength of national manufacturing. But this is a quiet week, so markets may give this more attention than it deserves”.
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