Empire State Manufacturing Activity Rooted in Contraction

Business conditions in the state of New York continued to deteriorate in November, declining for a fourth straight month despite recent signs of stabilization in the U.S. manufacturing sector, according to the Federal Reserve Bank of New York. The Empire State's business conditions index came in at -10.7 this month, compared with -11.4 in October and -14.7 in September. Economists surveyed by The Wall Street Journal expected the gauge to improve to -5. A reading above zero reflects expansion; a reading below that level denotes contraction. The index is still firmly in contractionary territory and again fell short of the bounce economists expected. The U.S. manufacturing sector remains under pressure from weaker global demand and from the stronger U.S. dollar, which makes exports more expensive. Recent reports from some pockets of the country have shown modest improvement, though producers in the northeast have continued to report unfavorable conditions. The gauge follows the government's latest employment report, which showed no change in overall manufacturing hiring activity last month but a slight improvement in the length of employees' workweek. The New York Fed survey is the first monthly factory report released by regional Fed banks. Economists use the Fed surveys to forecast the health of the national industrial sector as captured in the monthly manufacturing report released by the Institute for Supply Management, next due out Dec. 1.

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