NEW YORK (Reuters) - Manufacturing activity in New York state plunged in March by the most on record to its lowest level since 2009, offering an early glimpse of the coronavirus’ damaging impact on the U.S. economy.
The report from the Federal Reserve Bank of New York on Monday also showed optimism about the future among manufacturers in the state was the lowest since the financial crisis more than a decade ago.
The survey was conducted between March 2 and March 10, when the coronavirus was spreading across the United States. The virus has killed more than 6,500 people and sickened almost 170,000 across the world, according to a Reuters tally, heightening financial market fears of a global recession.
The Federal Reserve and global central banks moved aggressively on Sunday to shore up the world economy, with the Fed slashing interest rates to near zero, pledging hundreds of billions of dollars in asset purchases and backstopping foreign authorities with the offer of cheap dollar financing.
“This (New York Fed) report is likely the first of many indicators we receive over the coming weeks that will signal that economy activity has slowed sharply in the wake of the coronavirus outbreak,” said Oren Klachkin, lead U.S. economist at Oxford Economics in New York.
The New York Fed said its Empire State Manufacturing Index dropped last month to negative 21.5, the lowest since March 2009, from positive 12.9 in February. The 34 point drop was the largest in the survey’s history dating to 2001.
Optimism about the future also fell 22 points to a reading of 1.2, the lowest since 2009. The survey’s measure of new orders dropped to negative 9.3 and the shipments index fell to minus 1.7. Labor market measures also weakened this month.
The index for the number of employees at factories in the region dropped eight points to negative 1.5 and average workweek fell to minus 10.6, indicating a shorter workweek.
The dollar was trading weaker against a basket of currencies, while U.S. Treasury prices rallied. U.S. stocks plummeted, with the S&P 500 tumbling 8% at opening, triggering an automatic 15-minute halt of Wall Street’s three main indexes for the third time in six days.
“If you thought that the economy could withstand the COVID-19 pandemic, this month’s Empire State Survey is a rude awakening,” Adam Kamins said an economist at Moody’s Analytics in West Chester, Pennsylvania. “With the situation likely to deteriorate further in the coming weeks and months, any hopes for a quick rebound are a pipe dream.”
Reporting by Dan Burns and Lucia Mutikani; Editing by Chizu Nomiyama and Will Dunham