18 Aug 2015
Sharp deceleration in US Empire State manufacturing explained – Nomura
FXStreet (Mumbai) - Research Analysts at Nomura explain the reasons behind a contraction of manufacturing activity in the region in August.
The headline business conditions index declined from 3.86 in July to -14.92 in August, its lowest level since April 2009.
Key Quotes:
“Such a large monthly decline in the headline index is quite unusual and we believe this can possibly be explained by a few factors.”
“The devaluation of the China renminbi probably led to increased concerns among manufacturing firms about weak foreign demand—the official cutoff date for the Empire State manufacturing survey is the 10th of the respective month, but surveys are usually accepted until the 15th."
"This survey is sent to manufacturing executives and might be more sensitive to financial conditions and/or concerns about overseas than purchasing managers' surveys,”
“Renewed decline in energy prices”
“The need for slower inventory building, given the strong inventory investment over the past few quarters (the inventories sub index within the report declined to -17.27 from -8.51). Our current Q2 GDP tracking suggests that inventory investment boosted GDP by 0.6pp.”
The headline business conditions index declined from 3.86 in July to -14.92 in August, its lowest level since April 2009.
Key Quotes:
“Such a large monthly decline in the headline index is quite unusual and we believe this can possibly be explained by a few factors.”
“The devaluation of the China renminbi probably led to increased concerns among manufacturing firms about weak foreign demand—the official cutoff date for the Empire State manufacturing survey is the 10th of the respective month, but surveys are usually accepted until the 15th."
"This survey is sent to manufacturing executives and might be more sensitive to financial conditions and/or concerns about overseas than purchasing managers' surveys,”
“Renewed decline in energy prices”
“The need for slower inventory building, given the strong inventory investment over the past few quarters (the inventories sub index within the report declined to -17.27 from -8.51). Our current Q2 GDP tracking suggests that inventory investment boosted GDP by 0.6pp.”