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NY Fed's Empire State business index hits lowest since May 2017

Key Points
  • The New York Federal Reserve said on Tuesday its barometer on business activity in New York state declined more than expected in January to its lowest level since May 2017, suggesting a further deceleration in domestic factory activity.
  • U.S. manufacturers have grown worried about the ongoing trade tension between China and the United States and evidence of slowing global economic growth.
John Williams, CEO of the Federal Reserve Bank of New York.
Kevork Djansezian | Bloomberg | Getty Images

The New York Federal Reserve said on Tuesday its barometer on business activity in New York state declined more than expected in January to its lowest level since May 2017, suggesting a further deceleration in domestic factory activity.

U.S. manufacturers have grown worried about the ongoing trade tension between China and the United States and evidence of slowing global economic growth.

The regional Fed's "Empire State" index on current business conditions fell to 3.90, lower than a reading of 10.75 forecast among analysts polled by Reuters.

The December figure was upwardly revised to 11.50 from an earlier reported 10.9. A reading above zero signals the New York manufacturing sector is expanding.

"Manufacturing firms in New York State reported that business activity expanded slightly," the New York Fed said in the latest report.

The deceleration in manufacturing growth was broad-based with a pullback in new orders, shipments and employment in January.

New York's manufacturing firms were also less optimistic. The survey's six-month outlook gauge tumbled nearly 13 points to 17.8.

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Key Points
  • Federal Reserve Chairman Jerome Powell says the central bank's balance sheet will be "substantially smaller" than it is now.
  • The remark implies that the Fed will continue a process market participants call "quantitative tightening" of policy.
  • The Fed had been holding about $4.5 trillion worth of mostly Treasurys and mortgage-backed securities and has reduced the total by about $400 billion during the balance sheet roll-off.