NY Empire State Manufacturing Index Missed Expectations Pinching Businesses and Consumers

Key Insights

• NY Empire State Manufacturing Index declined from -11.2 to -32.9.
• Businesses do not expect to see material improvements in the near term. 
• U.S. dollar is trading near session lows after the release of the report. 

NY Firms Expect Little Improvement In Business Conditions Over The Next Six Months

On January 17, the U.S. reported that NY Empire State Manufacturing Index declined from -11.2 in December to -32.9 in January. Analysts predicted that NY Empire State Manufacturing Index would improve to -9, so the report missed expectations.

According to the report, “new orders and shipments declined substantially […] Looking ahead, firms expect little improvement in business conditions over the next six months.”

The NY Empire State Manufacturing Index report highlighted recession risks. The economy is slowing down as high-interest rates put pressure on businesses and consumers.

The report may be seen as somewhat bullish for riskier assets as it falls in line with the current market consensus that implies that Fed would not be able to push rates above the 5.00% level in 2023.

S&P 500 Futures Are Flat After The Report

The U.S. stock market showed little reaction to the NY Empire State Manufacturing Index report. S&P 500 futures have settled near the 3990 level in premarket trading. Traders expect that the Fed will raise the federal funds rate by 25 bps at the next meeting, and the report does not change this consensus.

Meanwhile, the U.S. dollar moved towards session levels. Currently, the U.S. Dollar Index is trying to get to the test of the 102 level. Currency traders bet on a less hawkish Fed, which is bearish for the U.S. dollar.

Gold is trying to settle below the $1915 level despite weaker dollar. The report did not have a significant impact on the dynamics of gold markets.

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