The Federal Reserve Bank of New York’s September Manufacturing Survey indicates general economic index dropped to minus 10.41, the lowest since April 2009, from minus 5.85 in August. (The median forecast of 53 economists in a Bloomberg survey had called for minus 2). The new orders index fell nine points to -14.0, its third straight negative reading. Readings less than zero signal contraction in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.
“The thing that’s really hanging over us right now is there is a large tax increase pending here at year-end, and there are large spending cuts, government spending cuts, looming at year-end,” Michael DeWalt, director of investor relations at Peoria, Illinois-based Caterpillar, said in a Sept. 14 conference presentation. “If something is not done about that, it could be quite negative. So, it’s not a clear picture.”
As if on Cue a NAM Industry Week Survey of manufacturers ranks “uncertainties related to the political climate” at the top of the list of issues impeding growth with it cited by 78.7 % of the respondents.
In a series of supplementary questions to the Empire State Survey manufacturers were asked about modifications to 2012 hiring and capital spending—both year-to-date changes and revisions planned for the rest of the year. Substantially more firms (roughly twice as many) made downward than upward revisions in their plans for the second half of the year. As for actual spending year-to-date, modest downward adjustments were made, on balance. When asked about negative influences on 2012 hiring and capital spending plans, a majority of respondents cited increased uncertainty about business prospects.