New York Federal Reserve’s factory index near two-year low
By Tom Stundza -- Purchasing, 4/18/2007 9:59:00 AM
The New York Federal Reserve reports that factory activity in its district has been idling in April, barely moving from a two-year low point seen in March. “Manufacturing growth in the Fed’s Second District, basically New York State, remained near a two-year low this month as shipments fell and inventories increased. The data indicate the manufacturing sector continues to struggle with weak demand that is limiting pricing power even while costs are rising," write economists at Nomura Securities.
The Federal Reserve Bank of New York's general economic index rose to 3.8, from a 1.9 March reading that was the lowest since May 2005. New York Fed index readings greater than zero signal expansion; the measure averaged 20.3 for all of 2006.
The slowdown in manufacturing, coupled with a weak housing market, is weighing on economic growth. Manufacturing will continue to struggle as factories cut production to work off inventories and the weak housing market hurts demand for building supplies and home appliances, economists said. “Most factory indicators suggest that activity in the manufacturing sector remains subdued, a situation that is likely to persist until the inventory correction has more fully run its course” Michelle Girard, an economist at RBS Greenwich Capital in Greenwich, Connecticut, said in a note to clients.
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