U.S. manufacturing declining – Nomura

By FXStreet Analysts at Nomura explained that the New York Federal Reserve today reported that the Empire State manufacturing headline index declined to -9.02 in May from 9.56 in April, falling well below expectations (Nomura: 8.0, Consensus: 6.5).

Key Quotes:

“It now seems that the improvement in the index in March and April was probably due to overly optimistic reactions from respondents to the survey to the rally in equity prices and increases in commodity prices at that time. We have seen similar trends in other regional manufacturing surveys as well, with sentiment souring again and converging to the hard manufacturing data, which have consistently indicated that actual activity remains sluggish.

Interestingly, a similar pattern was seen in a series of weaker-than-expected Chinese economic data for April as China’s industrial production, fixed investment and retail sales for the month all decelerated and fell short of market expectations after having rebounding in March.

On the details, the ISM-adjusted Empire State index, which takes the subcomponent indexes into account, also re-entered contraction (sub-50) in May, falling to 48.1 from 51.9 previously. The measures of current activity fell off sharply, with new orders declining to -5.54 from 11.14, shipments falling to -1.94 from 10.17 and unfilled orders dropping …read more

Source:: FX Street