Empire State manufacturing index drops sharply in December

Business activity in New York's manufacturing sector declined sharply this month, according to the Empire State Manufacturing Survey by the regional Federal Reserve bank on Friday.

The headline general business conditions index, which measures activity for New York's manufacturers each month, dropped 24 points to -14.5 from +9.1 in November.

This was significantly lower than the drop to +2.0 expected by the market and the 12-month average level of -8.6.

The survey showed that just 18% of respondents reported improving conditions over the month, while 32% said conditions had worsened.

The New York Fed said that new orders fell for the third straight month, while shipments also declined. Meanwhile, employment across the sector fell to its lowest level in several months, along with a slight decline in hours worked.

Looking ahead, the index for future business conditions jumped 13 points to +12.1 but that level suggests optimism was "still subdued", the survey said. "New orders and shipments, as well as employment, are expected to increase only modestly over the next six months."