The Empire State Manufacturing Index has sunk to a record low of -78.2 in April, more than double the previous low of -34.3 which was seen during the Great Recession. Economists had forecast an April drop to -32.5. The vast majority of respondents reported worse conditions over the past month.
- Manufacturing in the New York area saw the worst performance in recorded history according to the latest NY Fed report.
- 85% of businesses reported worse conditions vs. just 7% reporting improvement.
- Massive drops were seen in employment, new orders, and shipments among respondents.
Manufacturing has taken a huge blow in New York over the last month as a result of the coronavirus pandemic. New York is the worst-hit state in the US, which in turn is the global epicenter for the outbreak. The shocking reading of -78.2 marks severe contraction, far worse than the lowest point ever seen in the index which occurred during the 2007-2009 financial crisis. Around 5 in every 6 businesses reported worse conditions in April, and the outlook for the future is bleak, with the future expectations registering a reading of just 7.
59% of companies had fewer employees in April with a mere 3.3% reported more employees. 77% reported a drop in new orders, and 76% reported reduced shipments. 51% of companies said the average work week had declined. The report did indicate that respondents expect conditions to have slightly improved in six months time, although a slight improvement from current conditions could still leave many businesses in very poor shape.
Source: New York Fed
Expectations for prices paid in six months’ time fell drastically, with a change of -19.6, and prices received in six months fell -16.7. Expectations for capital expenditures in six months dropped -25.4, with businesses forecasting greatly reduced spending in the future as a result of the current crisis.
“New orders and shipments declined at a record pace. Delivery times lengthened, and inventories fell. Employment levels and the average workweek both contracted at a record pace,” the New York Federal Reserve said in a release. “Input price increases slowed considerably, while selling prices declined modestly.”
"The New York Empire State Manufacturing Index tumbled 56.7 points from the previous month to -78.2 in April 2020, the lowest level on record. New orders and shipments declined at a record pace, as well as employment levels and the average workweek."https://t.co/UYMprGurJ8 pic.twitter.com/2IyvSFA6wW
— Sebastian Sienkiewicz (@Amdalleq) April 15, 2020
“Firms anticipate only a small improvement in business conditions over the next six months. The index for future business conditions edged up six points to 7.0. The indexes for future new orders and future shipments declined, but remained positive, suggesting that firms expect orders and shipments to be modestly higher in six months compared with this month’s levels. The capital expenditures and technology spending indexes both fell to -11.0, a sign that firms planned to reduce both kinds of spending.”
Gold prices have seen a major correction in today’s session. Spot gold last traded at $1,724.44/oz, down -.70% with a high of $1,738.56/oz and a low of $1,709.57/oz. Gold prices have largely ignored today’s reports of record drops in NY manufacturing and in national retail sales, and the downward momentum is likely a natural technical correction following recent strong gains in precious metals.