A gauge of manufacturing in New York State contracted for a fifth month in a row in October, but modest improvements in new orders and employment provided a hit of stabilization, the New York Federal Reserve said in a report on Monday.
Still, the sector was not completely out of the woods as survey respondents' outlook for the next six months weakened to the lowest level since February 2009.
The New York Fed's Empire State general business conditions index was little changed, up slightly at minus 8.48 from minus 8.82 the month before. Economists polled by Reuters had expected a reading of minus 4.0.
The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions. Manufacturing has helped support the economic recovery, though the pace of growth has slowed this year and some regions have contracted.
New orders rose to 0.16 from minus 8.0, while inventories were up at minus 8.99 from minus 11.96. Despite the flat reading, new orders were still at the highest level since May.
While the headline was weaker than expected, nearly matching last month's dismal disappointment, the details are in fact firmer with gains in new orders, shipments, employees, David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut, wrote in a note.
U.S. stocks index futures added to losses immediately after the data, while Treasuries prices trimmed losses and the euro lost further ground against the dollar.
Employment gauges were mixed. The index for the number of employees rose to 3.37 from minus 5.43, but the average employee workweek index fell to minus 4.49 from minus 2.17.
The outlook for the coming months worsened, with the index of business conditions six months ahead dropping to its lowest level since February 2009 at 6.74 from 13.04 last month.