The regional offices of the Fed are noticing moderate growth in the New York area but a sharp rebound in the Philadelphia area.
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Manufacturing activity evolved in a contrasting fashion in October in the United States, recording moderate growth in the New York region but a sharp rebound in the vicinity of Philadelphia, according to data from the regional offices of the Fed.
In New York, the Empire State index, which had risen sharply in September, slowed down in October, losing 7 points to 10.5 points, disappointing analysts who expected 14 points.
The index remains well above zero, showing growth in activity, but it is declining, highlighting a slowdown.
In the Philadelphia region, the activity indicator gained 17.3 points to reach 32.3 points. This is much higher than analysts’ expectations (+16). Components measuring general activity such as new orders and deliveries show “a noticeable improvement,” the Fed said in a statement.
“The Fed’s regional surveys indicate that the manufacturing sector continues to rebound after its fall caused by the pandemic” in April and May, commented Oren Klachkin, economist at Oxford Econmics in a note.
In New York, the expansion was supported by an increase in deliveries and an increase in new orders.
“But employers continue to hire cautiously,” Klachkin said.
The Philadelphia Fed manufacturing index has reached “its highest level since the start of the pandemic,” he added.
The regional branches of the Fed, for their part, underlined in their press release the optimism of companies regarding growth for the next six months even if the people questioned were again more optimistic in the Philadelphia region.
However, the uncertainty surrounding the evolution of the COVID-19 pandemic remains a major brake on growth.
The slowdown in the New York area comes as New York City authorities recently took new restrictive measures to stem potential outbreaks of the disease, especially in Brooklyn.
Economists have been hammering for months that without complete control of the virus, economic activity cannot fully resume its growth.
“The demand for goods from consumers and businesses will slow down as economic dynamics weaken,” said Oren Klachkin.
Especially since Democrats and Republicans have still not found a consensus to vote for a new crucial support plan for the recovery.
Thus, despite the jump recorded in Philadelphia, October levels remain below those recorded before the pandemic.
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