Manufacturing Indices Continue Negative Trend In December

Date: December 21, 2015

Philadelphia, New York Federal Reserve Manufacturing Data Shows Weak Sector Activity

The AP reported that according to the New York Federal Reserve Bank, factory activity in New York state “shrank for the fifth straight month in December, forcing significant job cuts.” The Empire State manufacturing index, conducted by the Federal Reserve Bank of New York, improved but remained in “negative territory,” moving up to -4.6 from -10.7, the story said. While a gauge of new orders improved from -11.8 to -5, it was still below zero. Employment fell from -7.3 to -16.2. However, the shipments sub-index rose from -4.5 to 5.5, the sole component of the index reporting positive growth.

Results were similar for the mid-Atlantic region, according to the Philadelphia Federal Reserve manufacturing index. Investor’s Business Daily reported that the Philadelphia Federal Reserve’s manufacturing index “came in much worse than expected in December,” registering a -5.9, down from the index’s 1.0 mark in November and below the 1.2 expected by analysts. The December reading is the lowest the index has hit since February 2013 “as weak global demand, falling commodities prices and a strong dollar continued to hurt U.S. manufacturers.” Breaking down the manufacturing index further, the new orders index dropped to -9.5, marking the “third straight month in negative territory,” and “unfilled orders fell to -17.7, the lowest since April 2009.” MarketWatch also reported on the Philly Fed Index, noting the shipping index gained 6 points to move into positive territory with a reading of 3.7.

What This Means For Small Businesses

The latest news from the New York and Philadelphia Fed indices shows that manufacturing continues to see uneven growth across a wide swath of the US. In the latest NFIB report on Small Business Economic Trends, chief economist William Dunkelberg said of the current environment for business conditions, “The net percent of owners planning to add to inventory was unchanged at a net 0 percent, not much help for Q4 GDP growth. With weak expectations for sales and business conditions, prospects for strong inventory investment are poor.”

Additional Reading

24/7 Wall Street also reported on the New York Manufacturing Index.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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