On Monday morning, the Federal Reserve Bank of New York released its Empire State Manufacturing Survey for September. The survey indicated its second consecutive decline as the general business conditions index slipped another five points to negative 10.4. Economists had been expecting the index to increase to negative 2.0 from August’s negative 5.8. A result below zero indicates contraction. The current result is the lowest reading since November of 2010.
The survey’s new orders index fell to negative 14.0 from August’s reading of negative 5.5. The index for the number of employees fell from 16.47 in August to 4.3 in September, its lowest level of the year. The result was seen as a signal of a pullback in hiring activity.
On the positive side, indices for the six-month outlook were generally steady or higher in September than in August. The future general business activity index rose 12 points to 27.2. The expected new orders index marked a 15-point improvement to 17.0. Although the index for the expected number of employees rose 5 points to 8.5, employment levels were expected to increase only slightly during the coming months.
From the report:
The September Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to weaken. The general business conditions index slipped another five points to -10.4, its second consecutive negative reading. The new orders index fell nine points to -14.0, its third straight negative reading. Both of these measures reached their lowest levels in almost two years. The shipments index was little changed at 2.8. The prices paid index edged up to 19.2, suggesting moderate increases in input prices, while the prices received index hovered a little above zero for a fourth consecutive month. The index for number of employees fell noticeably but remained just above zero at 4.3, suggesting a slower pace of hiring activity than in recent months. The average workweek index remained near zero. By contrast, indexes for the six-month outlook were mostly steady to somewhat higher than in August, suggesting modestly greater optimism about business conditions in the months ahead.
On London’s ICE Futures Europe Exchange, November futures for Brent crude oil declined by $3.79 (3.25%) to $112.87/bbl. (NYSEARCA:USO).
The major ETFs expected to respond to the Empire State Manufacturing Survey for September are:
Industrial Select Sector SPDR ETF (NYSEARCA:XLI) -0.40%
Materials Select Sector SPDR ETF (NYSEARCA:XLB) -1.28%
iShares Dow Jones US Industrial Sector Index Fund (NYSEARCA:IYJ) -0.58%
Consumer Staples Select Sector SPDR Fund ETF (NYSEARCA:XLP) +0.22%
iShares Dow Jones US Financial ETF (NYSEARCA:IYF) -0.77%
Bottom line: The New York Fed’s Empire State Manufacturing Survey brought disappointing news, suggesting that the economic recovery continues to drag along at an anemic pace.
Disclaimer: Wall Street Sector Selector trades a wide variety of ETFs and positions can change at any time.