New York state’s manufacturing sector unexpectedly contracted in October, according to a report released Friday from the New York Federal Reserve.
The New York Fed’s “Empire State” general business conditions index contracted to minus 2.21 from 1.52 in October.
A reading above zero indicates expansion, while reading above indicate expansion. Friday’s was the first negative reading since May, and took economists by complete surprise. Economist polled by Reuters had forecasted an index of 5.0.
The report highlights more challenges still facing the world’s largest economy, where the recovery remains a term rather than a reality. Many have scapegoated the partial government shutdown in October, but the latest economic data in the wake of that impasse has been mixed, at best. Thus far, the data shows no causation.
The new orders index completely plummeted to minus 5.53 from 7.75, and shipments saw the bottom pull out from underneath them, falling to minus 0.53 from 13.12.
Labor market conditions further weakened, with the index for the number of employees slipping to 0.0 from 3.61 in October. The average employee workweek index also sank to minus 5.26 from 3.61.
Ironically, the New York Fed claims that firms remained relatively optimistic in November, following on a buoyant outlook in October.
The index of six-month business conditions slipped down to 37.51 from 40.76.
The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions, with more economic manufacturing data and indexes shortly following.