U.S. Empire Manufacturing Slips to Record Low as Demands Falter

The Empire manufacturing index fell to a record low reading of -25.4 from -24.6 in October to reach its lowest level since recordkeeping began in 2001. Despite the significant decline in production, the release was slightly better than the -26.0 forecast projected by economists. A breakdown of the report showed that new orders slipped to -22.21 from -20.45, while the employment component plunged to -28.92 from -3.66 in the previous month. Fading demands from home and abroad have led firms to aggressively cutback on production, and conditions may only get worse over the coming months as the major economies around the world head into a recession. In addition, the dour outlook for the world’s largest economy has fueled expectations that employment opportunities will become increasingly scarce as firms cut down on costs, and may lead the jobless rate to surge higher well into the next year. Meanwhile, deteriorating fundamentals continues to spur expectations for a rate cut by the Fed at the December 16th policy meeting, and the central bank may continue to ease policy further in order to avoid a deep and severe recession.