RTTNews - Conditions for New York manufacturers were roughly flat in July, according to a report released by the Federal Reserve Bank of New York on Wednesday, with the index of activity in the sector rising to a level close to zero.
The New York Fed said its general business conditions index rose to a negative 0.6 in July from a negative 9.4 in June, with a negative reading indicating a contraction in activity. Economists had been expecting a more modest increase to a reading of negative 5.0.
While the negative reading indicated a slight contraction in activity, the index rose to its highest level since a positive 0.8 in April of 2008.
A turnaround by new orders contributed to the improvement in the sector, with the new orders index rising to 5.9 in July from a negative 8.2 in June. With the increase, the index climbed into positive territory for the first time since September of 2008.
Shipments also showed a significant improvement, as the shipments index jumped to 11.0 in July from a negative 4.8 in June.
At the same time, the report also showed an acceleration in the pace of contraction in inventories, with the inventories index falling to a record low of negative 36.5 in July from a negative 25.3 in the previous month.
Employment also continued to contract in July, although the number of employees index edged up to a negative 20.8 from a negative 21.8 in June.
On the inflation front, prices paid and prices received were mixed on the month. While the prices paid index rose to 10.4 in July from a negative 5.8 in June, the prices received index remained negative at negative 8.3 compared to a negative 12.6 in the previous month.
The prices paid index rose above zero for the first time since November of 2008, indicating that input prices are once again on the upswing.
Looking ahead, the New York Fed said the six-month outlook remained favorable in July, although the future indexes were somewhat lower than last month.
The future general business conditions index fell to 34.0 in July from 47.8 in June, but it remains well above the very low levels of earlier this year.
Commenting on the data, Peter Boockvar, equity strategist at Miller Tabak, noted, This is the first July industrial number, and we thus need to see many others in order to confirm today's near neutral reading.
On Thursday, the Philadelphia Federal Reserve is due to release its regional report on activity in the manufacturing sector. The Philly Fed Index is expected to slip to a negative 5.0 in July from a negative 2.2 in June.
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