NY Manufacturing Slows, Prices Paid Falls Again, Foreign Demand for US Assets Still Very Strong

- Empire Manufacturing for April fell to 15.8 versus estimates of 24.3 and a reading of 29.0 in March.
- Net Foreign Security Purchases for February rose to $86.9 billion versus estimates of $60.0 billion and an upwardly revised $69.1 billion in January.

BOTTOM LINE: Manufacturing in New York State expanded at a slower pace in April as growth in sales and orders eased, Bloomberg reported. The component of the index measuring the outlook for the next six months rose to 42.7 versus 38.1 the prior month. The employment component of the index fell to 17.4 versus 20.1 in March. The New Orders component of the index fell to 14.1 versus 27.0 the prior month. The Index of Prices Paid fell to 37.9 versus 39.3 in March. The Prices Paid Index has now fallen 37.4% from November 2005 highs. Manufacturing will likely decelerate over the coming months, but continue to add to US economic growth.

International investors increased their net holdings of US assets by $86.9 billion in February amid strong demand for US bonds and faster economic growth, Bloomberg said. The UK, China and OPEC countries all increased their holdings of US Treasuries in February. Caribbean banking centers, which are considered a barometer of hedge fund activity, cut their Treasury holdings by $11 billion. Foreigners’ holdings of US stocks rose $16.5 billion. I expect foreign demand for US assets to remain very strong over the intermediate-term.