(Bloomberg) -- A gauge of New York state manufacturing activity unexpectedly expanded in July for the first time in three months, though a measure of the industry outlook deteriorated sharply to a more than 21-year low.
The Federal Reserve Bank of New York’s general business conditions index climbed to 11.1 from minus 1.2, a report showed Friday. A reading above zero indicates growth, and the July figure exceeded all forecasts in a Bloomberg survey of economists.
At the same time, the Fed bank’s index of business conditions six months from now slumped more than 20 points to minus 6.2. That marked the largest contraction since the terrorist attacks in September 2001.
The data suggest that while supply constraints are easing, red-hot inflation and higher borrowing costs are raising concerns about demand in coming months and the possibility of a recession. The report is the first of several regional Fed bank manufacturing numbers set for release over the coming weeks.
The New York Fed bank’s gauge of current new orders improved to 6.2 from 5.3, while the index of shipments jumped more than 21 points to 25.3. Measures of both employment and hours worked continued to expand, though at a softer pace.
Meantime, the prices-paid index settled back along with the bank’s gauge of prices received to still-elevated levels.
Expectations deteriorated as firms grew more downbeat about orders and shipments. They anticipate a decline in hours worked.