The New York Fed’s manufacturing index grew far below expectations in April, while the cost of food and shelter increased above forecasts, two reports said Tuesday.
The New York Fed’s “Empire State” general business conditions index fell to 1.29 this month, which is the lowest measurement since November, down from 5.61 in the previous month of March. Economists polled by Reuters had expected a reading of 8.0, but a decline in new orders and a decline in inventories threw economists for a loop.
The measurement still remains in growth territory, albeit anemic growth, as any reading above zero represent growth. New orders tumbled to -2.77, down from 3.13 the month prior, while inventories plummeted to -3.06, down from 7.06.
The index measuring the number of employees actually rose to 8.16, up from 5.88, but the average employee workweek index dropped to 2.04, down from 4.71. The workweek decline in the survey of manufacturing plants in New York state, which is one of the earliest monthly forecasts to U.S. manufacturing, is troubling considering the Consumer Price Index released by the Labor Department.
The Labor Department said Tuesday that its Consumer Price Index increased 0.2 percent last month, up from 0.1 the month prior, and beating Wall Street’s expectations. Though the rise is fairly small overall, the increases in food and shelter costs were offset by a steep decline in gasoline prices.
Economists polled by Reuters had expected a mirrored 0.1 percent rise last month.
Food prices, alone, increased 0.4 percent in the month of March, after rising by the same degree in February. Economists are expecting even more increases in food costs. However, Gasoline prices dropped sharply by 1.7 percent, which was the third straight month in declines
Shelter costs increased by 0.3 percent in the Core CPI, which represented nearly two-thirds of the entire index gain. The cost of rents also increased 0.3 percent, as well as increases in the cost of medical care, apparel, used cars and trucks, airline fares and tobacco. However, recreation costs and the price of household furnishings ticked down.
In the 12 months through March, consumer prices increased 1.5 percent after rising 1.1 percent over the 12 months through February. It is unlike the Fed will look to move their interest rates despite the increase in the cost of products everyday Americans rely upon everyday, because even though Yellen claimed monetary policy is geared toward the worker, the reality is far different. The Fed looks at the index as a whole, not on a class basis.