Workers walk through Boyce Technologies Inc. in Long Island City in the Queens borough of New York.
Bloomberg
The numbers: The New York Fed’s Empire State business conditions index rose 29.7 points to -48.5 in May, the regional Fed bank said Friday. This is the second-lowest reading on record. Economists had expected a reading of -65, according to a survey by Econoday.
Any reading below zero indicates deteriorating conditions.
What happened: Fifteen percent of manufacturers reported that conditions were better in May than April
New orders and shipments continued to decline though not as steeply as in April.
The new-orders index rose 23.9 points to -42.4 in May while shipments rose 29.1 points to -39. Optimism about the six-month outlook did improve. The index for future business conditions rose 22 points to 29.1.
Employment levels fell further in May but not at the sharp pace of April. The index for number of employees rose almost 50 points to -6.1. Hours worked continued to decline.
Big picture: Some economists were saying the rebound showed that April was the bottom for manufacturing, while others said that was extrapolating too much from the data. The latter economists pointed out that some of the improvement in May came from firms reporting that activity was unchanged at zero after reporting steep declines in April.
What are they saying? “Manufacturers are holding on to their hopes of a turnaround, but we believe significant caution is warranted. Looking ahead, the road to recovery will be long, and uneven, with depressed demand, supply-chain disruptions and elevated uncertainty hindering the rebound we expect to take shape in the third quarter,” said Oren Klachkin, economist at Oxford Economics.
Market reaction: U.S. equity benchmarks are slumping Friday as retail sales dropped sharply and there were signs of tensions with China. The Dow Jones Industrial Average DJIA, -0.34% was down 132 points in morning trading.
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