Manufacturing in the New York area unexpectedly contracted in August for the first time in 10 months, indicating U.S. factories are burdened by the global economic slowdown.
The Federal Reserve Bank of New Yorkâ€™s general economic index fell to minus 5.9 this month from 7.4 in July. The median estimate in a Bloomberg survey of economists was 7.0. Readings less than zero signal contraction in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.
A slowdown in demand from consumers in the first half of the year, limited capital spending and a build-up in inventories gives factories little reason to boost production. Orders for the regionâ€™s manufacturers fell to the lowest level in almost a year, showing the industry that spurred the recovery from recession is facing a bigger hurdle from a weaker global economy.
â€œThe outlook is not particularly favorable,â€ Millan Mulraine, a senior U.S. strategist at TD Securities Inc. in New York, said before the report. â€œSlowing global growth momentum will certainly eat into the global demand for U.S. exports and manufacturing in particular.â€
Stock-index futures held losses after the figures, with the contract on the Standard & Poorâ€™s 500 Index falling 0.2 percent to 1,398.4 at 8:32 a.m. in New York.
Estimates in the Bloomberg survey of 56 economists ranged from minus 2 to 10.
The Empire State gauge of new orders dropped to minus 5.5 in August from minus 2.7 the prior month, while the shipments measure fell to 4.1 from 10.3.