Empire State manufacturing index slumps in December to 19-month low

Bloomberg News/LandovAn employee sews a dress at the Ferrara Manufacturing Co. clothing factory in the Garment District of New York City.

The numbers: The Empire State manufacturing index fell 12.4 points to 10.9 in December, the New York Fed said Monday. That's the weakest level in 19 months. Economists had expected a reading of 21, according to a survey by Econoday.

Any reading above zero indicates improving conditions.

What happened: There was weakness across the board in the report. The new-orders index fell 5.9 points to 14.5 in December, while shipments fell 7 points to 21.

Big picture: The Empire State index is the first of several regional manufacturing gauges to be released. They can frequently be volatile from month to month, but taken together they present one of the timeliest reads on a critically cyclical sector. The Empire index had been stronger in November than the Philadelphia Fed index. Analysts are blaming trade tension with China and the strong DXY, +0.00% or the weaker manufacturing outlook.

What they are saying? "The consensus always looked optimistic, given the downshift in the Philly Fed index, as well as the sharp decline in China's business surveys," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Market reaction: Stocks tumbled on Monday with the Dow Jones Industrial Average DJIA, -2.11% down more than 400 points.