The numbers: Business activity in New York state has slowed over the past few months and expanded only slightly in December, according to the latest survey from the New York Fed released Tuesday. The bank’s Empire State business conditions index slipped to 4.9 in December from 6.3 in the prior month. Economists were expecting a gain to 7.2, according to Econoday. The Empire State index has fallen steadily after hitting 17 in September.
What happened: The new-orders index inched down 0.3 points to 3.4 in December while shipments rose 5.8 points to 12.1. Unfilled orders declined at a less rapid pace. Inventories fell 4.3 points to 4.3. Optimism about the six-month outlook rose 2.4 points to 36.3, suggesting firms remain optimistic about future conditions.
Big picture: The spread of COVID-19 is weighing on the regional economy and slowing activity. Activity in New York is at the low end of regional Fed surveys.
The Empire State index is an early read on factory conditions in the final month of 2020. The national ISM factory index slipped to 57.5 in November from 59.3 in the prior month, indicating that activity would continue.
What are they saying? “Manufacturing’s strong performance this year isn’t likely to be repeated in 2021. An end to the health crisis is slowly coming into view, and we expect that less buoyant demand, some lingering Covid-related supply chain disruptions, and less stimulative fiscal policy will constrain manufacturing activity next year,” said Oren Klachkin, lead U.S. economist at Oxford Economics.
Market reaction: Stocks were higher in early trading as efforts continued to complete another round of aid spending in Congress. The Dow Jones Industrial Average DJIA, +0.38% fell 184.82 points on Monday.