US Empire State index edges higher in December

The so-called Empire State index, which covers mainly the state of New York and 12 northern counties in New Jersey, rose from a reading of 2.9 for November to 3.5.

Nonetheless, that was worse than the consensus forecast for a print of 5.0 and according to Ian Shepherdson at Pantheon Macroeconomics pointed to slow growth in manufacturing and not a recession.

Indeed, the sub-index tracking firms' new orders slipped from a reading of 5.5 to 2.6, although another linked to employment levels in the area's factories was unchanged at 10.4.

"Since the spring, however, when the [US-China] trade talks broke down, the Empire State components have been much stronger than the ISM, probably because the NY state economy is not heavily exposed to China trade. The gap now is very wide [...]," said Shepherdson.

"The gap should narrow over the next couple of months as businesses digest the implications of the Phase One trade deal, but it will not disappear, given that most of the tariffs remain in place."