The numbers: The New York Fed’s Empire State business conditions index fell 1.4 points to 3.5 in January, the regional Fed bank said Friday. That is the fourth straight drop and the lowest level of activity since June. Economists had expected a reading of 7.2, according to a survey by the Wall Street Journal.
Any reading above zero indicates improving conditions.
What happened: The new orders index rose 3.2 points to 6.6 in January. Shipments lost 4.8 points to 7.3. Unfilled orders dipped 1.9 points to negative 5.5. Input price increases and selling price increases both picked up “noticeably,” the New York Fed said. The prices paid index has risen 41 points since May. Optimism about the next six-months dipped 4.4 points to 31.9.
Big picture: Economic growth remains sluggish in New York as the region continues to struggle through the coronavirus pandemic. Activity in New York is at the low end of regional Fed surveys. Manufacturing across the country is in better shape than the services sector, which has suffered as Americans have avoided person-to-person contact. The national ISM factory index jumped to 60.7 in December, the highest level since August 2018.
What are they saying? “The index has undershot, relative to its usual relationship with the national ISM manufacturing index, over the past three months. We’re assuming this is because the rebound in China is much more helpful to manufacturers on the west coast than the east coast,” said Ian Sheperdson, chief economist at Pantheon Macroeconomics.
Market reaction: Stocks lost ground Friday morning after President-elect Joe Biden announced a $1.9 trillion COVID-19 relief plan and the weak December retail sales report. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.85% was down 248 points in mid-morning trading.