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The numbers: The New York Fed’s Empire State business conditions index plummeted a record 57 points to -78.2 in April, the regional Fed bank said Wednesday. That’s the lowest reading on record. Economists had expected a much smaller decline to -35, according to a survey by Econoday.
Any reading below zero indicates deteriorating conditions.
What happened: New orders and shipments both declined at a record pace. Delivery times lengthened and inventories fell. Employment levels contracted at a record pace. One bright spot was that firms expect conditions to be slightly better in six months.
The survey found that 85% of manufacturers reported that conditions had worsened while only 7% reported improved conditions.
Big picture: This is the second straight record decline in the Empire Index as the coronavirus-related shutdown hit the factory sector hard. The prior lowest level of the index was -34.3 during the Great Recession of 2008-2009. Economists use the regional manufacturing surveys to get a sense of activity at the national level. The Institute for Supply Management said its manufacturing index slipped to 49.1% in March from 50.1 in the prior month. It looks like more deterioration is coming.
Market reaction: U.S. stocks DJIA, +2.39% were set to open lower on Wednesday, pulling back after strong gains in the prior session.
