Manufacturing in the New York area fell by its biggest margin ever to a historic low far worse than anything seen during the Great Recession.
The Empire State Manufacturing Index for April hit -78.2, far worse than the -32.5 expected by economists surveyed by Dow Jones. The worst reading the index had seen was -34.3 during the financial crisis.
The index measures companies reporting better vs. worse conditions over the past month. Just 7% reported stronger conditions, while 85% said things had weakened.
The report shows that "manufacturing is in meltdown," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. He said the index points to a reading of about 35 on the broader ISM manufacturing for the month, with anything below 50 representing contraction.
As businesses shut down due to coronavirus restrictions, it was no surprise that firms in New York, which has been the epicenter of U.S. cases, would experience a downturn or near total stoppage. However, the outlook ahead wasn't much better, with the future expectations index registering a 7% reading.
"New orders and shipments declined at a record pace. Delivery times lengthened, and inventories fell. Employment levels and the average workweek both contracted at a record pace," the New York Federal Reserve said in the report. "Input price increases slowed considerably, while selling prices declined modestly. Though current conditions were extremely weak, firms expected conditions to be slightly better six months from now."
Nearly 59% of companies reported fewer employees against just 3.3% saying they had more. About 77% said new orders had fallen, while 76% reported a decline in shipments. A net 51% of companies said the average work week had declined.
The prices paid index was -19.6 and prices received -16.7, both reflecting the deflationary impact the virus is expected to have on the regional and national economy.