Factory activity in New York suffered an unexpected collapse in January, a New York Fed study revealed Tuesday.
Business activity contracted sharply in January, according to the New York Fed's Empire State Manufacturing Survey. The business conditions index fell sharply, dropping 29.2 points in January to -43.7.
Economists expected the economy to improve and expected the index to rise to -4.7 from -14.5 in December.
A reading below zero indicates a worsening condition.
The business conditions index has fallen by 58.2 points over the past two months, the worst two-month decline in the index's history.
The new orders index fell more than 38 points to -49.4, the worst reading since April 2020, when the economy was in a slump due to pandemic lockdowns.
Even more troubling, an index of prices paid by manufacturers rose in January, suggesting rising inflationary pressures. Manufacturer price index fell slightly.
Manufacturers said they expected some improvement in the coming months, but the New York Fed said “optimism remains subdued.” Future business confidence, looking six months into the future, rose 7 points to 18.8. The capital investment index rose 10 points to 13.7, which the New York Fed said indicated “some improvement” in investment plans.
