WASHINGTON (Reuters) – The New York Federal Reserve said Monday its barometer of New York state manufacturing activity fell in May, but the survey is extremely volatile, making it more difficult to interpret.
The regional Fed’s “Empire State” index for current business conditions fell 42.6 points to -31.8 this month. A reading below zero indicates that the manufacturing sector in New York is shrinking. The slump followed a 35.4 point gain in April, which had lifted the index to a positive 10.8.
Economists polled by Reuters had forecast the index at -3.75.
Goldman Sachs noted that the survey “has been particularly volatile since 2022, fluctuating by at least 20 points in more than half of the cases.”
Nevertheless, higher interest rates and the rotation of spending from goods to services harm national productive activity. Tighter credit conditions are also seen as a barrier. The New York Fed will publish a study on credit access and credit conditions on Tuesday.
The Institute for Supply Management’s measure of national manufacturing activity has declined for six straight months
The New Fed survey’s measure of new orders fell 53.1 points to -28.0 this month, while shipments fell 40.3 points to -16.4. While manufacturing employment continued to hit recent lows, it remained under pressure. Factory gate inflation continued to slow.
Businesses did not expect a significant improvement in conditions over the next six months. The survey’s measure of future business conditions rose from 6.6 in April to 9.8.
(Reporting by Lucia Mutikani; editing by Chizu Nomiyama)