US manufacturing contracts again

01 July 2008

A gauge of manufacturing in New York state contracted in June for the fourth time in five months, the New York Federal Reserve said in a report that also painted a mixed picture on inflation.

The New York Fed’s “Empire State” general business conditions index fell to minus 8.68 from minus 3.23 in May.
Economists polled by Reuters had expected a reading of minus 2.00. Their forecasts ranged from minus 12.0 to plus 7.0.
The survey of manufacturing in the state is one of the earliest monthly guideposts to US factory conditions.
“It does give a tip-off on what is happening,” said Robert Brusca, chief economist at Fact and Opinion Economics in New York. “It’s not good to see the slippage.”
On Wall Street, stock futures turned lower after the report and the dollar fell against the euro.
Government bonds, which benefit from weak economic conditions and poor stock market performance, rose.
The prices paid measure of inflation eased to 66.28 — its first drop since December 2007 — from 69.57 in May. The May prices paid reading was the highest since the start of the data series in July 2001.
However, the gauge of prices received jumped to 26.74 — the highest since January 2006 — from 15.22 in May.
The rise in prices received could be worrying for inflation vigilantes since it suggests manufacturers are having success in passing their higher costs down the chain of buyers.

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