Conditions for New York manufacturers improved slightly in the month of April, according to a report released by the Federal Reserve Bank of New York on Monday, although the index of activity in the sector fell by more than anticipated.
The New York Fed said its general business conditions index fell to 3.1 in April from 9.2 in March. While a positive reading indicates an increase in activity in the New York manufacturing sector, economists had expected the index to show a more modest decrease to a reading of 7.5.
Amna Asaf, an economist at Capital Economics, said the bigger than expected drop by the index "suggests that softer global economic outlook is starting to have an effect on U.S. producers in the individual regions."
The report showed notable slowdowns in the pace of both new orders and shipments growth. The new orders index fell to 2.2 in April from 8.2 in March, while the shipments index dropped to 0.8 from 7.8.
On the other hand, the number of employees index climbed to 6.8 in April from 3.2 in March, indicating a faster rate of regional jobs growth.
The average employee workweek index also rose to 5.7 in April from 0.0 in the previous month, pointing to a modest increase in hours worked.
The report also showed that the prices paid index inched up to 28.4 in April from 25.8 in March, while the prices received index edged up to 5.7 from 2.2.
Looking ahead, the future general business conditions index fell to 32.0 in April from 36.4 in March, although the New York Fed said the indexes for the six-month outlook point to a moderate level of optimism about future business activity.
"The weighted average of the main sub-indices, which is a more robust measure, fell more modestly compared to the headline index, to +0.4 from +2.3, mainly because of the rebound in the employment index," Asaf said.
She added, "Nonetheless, at +0.4, the level of this more robust measure now points to another drop in the national ISM index from the already weak 51.3 recorded in March, although the release of some of the other regional surveys would paint a better picture of the overall economy."
Thursday morning, the Philadelphia Federal Reserve is scheduled to release its report on regional manufacturing activity. The Philly Fed Index is expected to edge up to 3.3 in April from 2.0 in March.
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