The numbers: The New York Fed’s Empire State business conditions index showed subdued conditions for manufacturing in the state for the seventh straight month. The index inched up 0.6 point to 3.5 in December, the regional Fed bank said Monday. Economists had expected a reading of 4.0, according to a survey by Econoday.
Any reading above zero indicates improving conditions.
What happened: The new-orders index fell 2.9 points to 2.6 in December while shipments rose 3.1 points to 11.9. Unfilled orders continued to decline.
If there was a silver lining in the data, optimism about the six-month outlook did improve. Future capital spending plans were also stronger.
In a separate reading, Markit said its preliminary flash manufacturing purchasing index slipped to 52.5 in December from 52.6 in the prior month.
What are they saying: “While [media] headlines made a big deal about the improvement in the 6-month expectations index, we caution that this is a volatile measure that does not do a very good job of foreshadowing what actual conditions will look like in six months,” said Josh Shapiro, chief U.S. economist at MFR Inc.
Big picture: The headline index has been stuck in a range between 2 and 5 since July, as manufacturing has been hit hard by weak business spending and a slowdown of international trade. Economists see signs that the sector is stabilizing. Investors look at the data mainly to get a sense of the national ISM index, which has been contracting for four straight months. The December ISM data won’t come out until early next year.
Market reaction: Stock were higher Monday as investors cheered the U.S.-China trade truce, even though details remains scarce. The Dow Jones Industrial Average DJIA, +0.36% was up 130 points in late afternoon trading.