Significant Deterioration in Empire Manufacturing Survey as it Contracts in February

New York area manufacturing unexpectedly tumbled into contractionary territory in February, for the first time in almost three years. The Empire manufacturing survey fell much further than anticipated to -11.9 from 9 in January. Consensus had been looking for a reading of 6.5. Any reading below zero indicates negative growth. Since the national ISM manufacturing fell below 50 in December, the largest drop in almost five years, this has to be viewed as further support of the deteriorating U.S. economy, despite the pick-up in exports. In the February Empire Manufacturing survey, new orders plummeted to -12 while shipments fell by -5. Unfilled orders and employment also fell into negative territory. Delivery time and inventories were both unchanged in February after falling in the prior month. Prices paid remain elevated at 47, up from 40 last month. This is the first of the regional manufacturing indicators. The New York survey is considered to be a better indicator of high tech industry, rather than heavy industry such as autos. One bright spot was that the outlook for six months from now rose to 23, but it remains below its 2007 average of 41. Unfortunately, the future employment reading fell to its second lowest reading since the series began in 2001.