A warning from US manufacturers
New York's manufacturing survey looks good on the surface. But underneath, things aren't quite so rosy.
America's Empire State Manufacturing Survey is a monthly questionnaire for manufacturers in New York State conducted by the local Federal Reserve. It's a useful guide to the city's business activity.
Results are shown as the difference between the percentages of positive and negative scores zero acts as the breakeven point. So a high figure indicates positive business sentiment, and vice versa.
What's the latest?
On the surface, it seems OK. The August figure flipped up to 7.1 from the 5.1 recorded last month.
But scratch below the surface, and the sub-indices the details, in other words don't look good at all. The 'new orders' index plummeted to a 14-month low of -2.7 from 10.1 previously. And the reading for business conditions in six months' time was equally downbeat.
What does this mean for stock markets?
The first chart below compares the Empire State 'new orders' index with the S&P 500. The box below that the purple line shows the 'six-months ahead business conditions' index. In other words, it shows what companies expect the economy to be doing in six months' time.
Neither is exactly comforting for market bulls. It seems a double dip in the US economy is already underway. That's likely to be more bad news for stock prices in America which will hurt London shares too.