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Empire State manufacturing index ticks down in July but beats forecast

By Michele Maatouk

Date: Monday 16 Jul 2018

Empire State manufacturing index ticks down in July but beats forecast

(Sharecast News) - Business conditions in the New York region deteriorated a little less than expected in July, according to a survey from the NY Fed.
The Empire State manufacturing index fell to 22.6 from 25.0 the month before, but was ahead of expectations for a reading of 22.0. About 40% of respondents reported that conditions had improved over the month, while 17% said they had worsened.

The new orders index declined to 18.2 from 21.3 in June, while the shipments index fell to 14.6 in July from 23.5 the month before. The inventories gauge declined to -4.3 from 5.4 in June and the unfilled orders index came in at 0.0 in July from 9.3 in June.

Optimism about the six-month outlook dipped, with the index for future business conditions down eight points to 31.1, basically reversing the gain from the previous month.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "On the face of it, this suggests that the latest round of tariff squabbles hasn't had much impact on business sentiment, but we're reserving judgment until we see the Richmond Fed report, due July 24. The Richmond Fed district incorporates several major ports, including Richmond, Charleston and Norfolk, and suffered its biggest-ever one-month drop in April, shortly after the imposition of steel and aluminium tariffs. It then reversed this fall in May.

"The Empire State survey has been much less volatile in recent months, but note that the details in July are weaker than the small dip in the headline suggests, with declines in orders, deliveries, shipments, inventories and employment. Weighting the key sub-indexes to match the structure of the ISM manufacturing index suggests that the latter will drop by a couple of points in July, though, again, we need to see more evidence from other regional surveys. We'd be surprised to see no impact from the widening trade war."

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