The numbers: The New York Fed’s Empire State business-conditions index fell to a reading of 3.7 in March from 8.8 in the prior month. This is the lowest level in almost two years. Economists had expected a reading of 10, according to a survey by Econoday.
Any reading above zero indicates improving conditions.
What happened: The new-orders index fell 4.5 points to 3 in March. The shipments index slipped 2.7 points to 7.7, its lowest level in more than two years. The index for the number of employees climbed 10 points to 13.8, indicating an increase in employment, but the average workweek turned negative for the first time since 2016.
Looking six months out, manufacturers remained fairly optimistic.
Big picture: This is the third monthly Empire State reading below 10, suggesting that growth is quite a bit slower so far this year than in 2018. Last year, the Empire State index averaged 19.8. A slowdown in China’s manufacturing sector was seen as the leading culprit. U.S. manufacturing is slowing; the question is by how much.
What are they saying? “This morning’s Empire State survey was consistent with a still-positive trend, but not by much,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Market reaction: Stocks were higher in late day trading Friday. The Dow Jones Industrial Average DJIA, +0.54% , which was up by over 100 points, has been higher in three of the last four trading days.