US manufacturing indices are not doing well. Will the Fed take them into consideration?
Something is wrong in US industry and the New York Manufacturing Forecast Index indicates it. New York's Empire State Manufacturing Index fell to -6.6 in July 2024, slightly below market expectations of -6 . New orders remained stable, while shipments saw a slight increase. Delivery times have improved and supply availability has remained unchanged.
Inventories declined, reflecting ongoing challenges. The labor market remained weak, with employment declining. Input prices increased modestly, while selling prices saw only minor increases. Despite current conditions, companies have expressed optimism for future improvement.
Richard Deitz, Economic Research Advisor to the New York Fed, noted that the state's manufacturing industry showed some sluggishness in July, but there were positive signs with steady orders and an increase in shipments. However, challenges persist with weak employment and capital spending plans. Despite this, there is optimism for future conditions. Falling employment could eventually start to worry the Fed and push it to cut rates.
The Empire State Manufacturing Index is crucial for several reasons:
- Economic Indicator: The ESMI is a leading indicator of New York State's manufacturing sector, which is a vital component of the state's economy. A strong manufacturing sector can contribute to job growth and overall economic well-being. New York's manufacturing sector is influential in terms of national contribution.
- Proxy for US manufacturing broadly: The index can also serve as a proxy for US manufacturing generally, as New York's manufacturing sector shares similarities with other regions.
Investment tool. - Policy Analysis: Policymakers and economists can use the ESMI to analyze the impact of monetary and fiscal policies on the manufacturing sector and assess the overall health of the economy.
So if the Index is not doing well it means that the policies are too restrictive, or that the economy is not working as it should and that therefore manufacturing is about to release workers, i.e. to lay off workers. The ESMI is a Fed index, and therefore the latter will not be able to ignore it.
Thanks to our Telegram channel you can stay updated on the publication of new Economic Scenarios articles.
The article US manufacturing indices are not doing well. Will the Fed take them into consideration? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gli-indici-manifattureri-usa-non-vanno-bene-la-fed-li-terra-in-considerazione/ on Tue, 16 Jul 2024 11:27:33 +0000.