- Esther George, Kansas City Fed President
Official data showed that the New York Federal Reserve's index of manufacturing conditions contracted for the first time in three months in May, as new orders and shipments turned negative. The general business conditions index fell to -9 in May, contrary to analysts' prediction of a modest pullback to 6.5 points from April's 9.56 points. The previous reading had been the indicator's highest since January 2015. The figures suggest that factories in the state continue to struggle despite growth in March and April. Factory output nationwide has been sluggish in the past year as a weak global economy has lowered exports and US businesses are spending less on equipment and machinery. The new orders and shipments indexes also pointed to a decline in both orders and shipments. A measure of new orders fell to –5.5, from 11.1 the previous month. Also, a gauge of shipments slipped into negative territory, falling to minus 1.9 from 10.2. Moreover, employment levels appeared to be little changed, while the average workweek index pointed to a decline in hours worked.
Thus, the so-called Empire State index suggests that the recovery from the US manufacturing recession will be sluggish at best. The average for the second quarter thus far, at 0.27 points, is slightly better than the -11.8 points logged in the first quarter.
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