The New York Federal Reserve Bank reported today that manufacturing activity in the New York area continued to contract in June. The Empire State Manufacturing Index fell to -8.7 in June, down from May's reading of -3.2. Analysts were expecting the index to improve to -2.4 for the month. Sub-indexes for new orders, shipments, and unfulfilled orders also worsened from their May levels. This marks the fourth month out of 5 that has seen the index wallowing in negative territory.

In other economic news, Moody's chief economist John Lonski said that the Federal Reserve may not need to raise interest rates due to the weakening economic environment. In a note, Lonski stated that, despite a jump in the consumer price index, "Lower employment income growth due to a slack labor market should help to rein in core price inflation and hold back the Fed." He also cited high foreclosure rates and "extraordinarily low consumer confidence" as a few factors that might prevent the central bank from raising interest rates.

Lonski's comments are in opposition to a forecast from Barclays (BCS) last Friday, which stated that the Fed will raise rates twice before the end of the year.