New York Fed manufacturing survey plummets to near three-year low

The Empire State Manufacturing Index has tumbled into negative territory after recording the largest monthly decline on record.

The headline general business conditions index for manufacturing in June, published by the Federal Bank of New York, fell 26 points to -8.6 after new orders receded and shipments increased modestly. That was well below consensus for a reading between 10.0 and 11.0, and the lowest reading since October 2016.

The survey of businesses, predominantly in New York State and northern New Jersey, found that unfilled orders fell, delivery times and inventories moved “slightly lower” and there were “small declines” in employment and hours worked.

“Indexes assessing the six-month outlook indicated that firms were less optimistic about future conditions than they were last month,” the Fed said.

However, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: “This looks terrible but it won’t last.

“The survey is conducted during the first 10 days of the month, so it likely reflects the peak of Mexico tariff fear; President Trump tweeted the tariff threat on 30 May and abandoned it on 7 June. During that period, businesses appear to have panicked.

“The next national ISM manufacturing report will be nothing like as weak as the Empire State survey appears to suggest.”