Big declines in orders, shipments hampered New York manufacturing activity in May

Still, manufacturers expect conditions to be better later this year  

A monthly gauge of New York manufacturing activity indicated the industry continues dealing with “significant declines” in orders and shipments as the coronavirus pandemic carries on.

The Empire State Manufacturing Survey general business-conditions index rose almost 30 points to -48.5 in May from its worst-ever reading of -78.2 in April.

Still, the May result, based on firms responding to the survey, indicates “business activity continued to deteriorate significantly in New York,” the Federal Reserve Bank of New York said in the report issued May 15.

A negative reading on the index indicates a decline in the sector, while a positive index number points to expansion or growth in manufacturing activity. 

The survey found 15 percent of respondents reported that conditions had improved over the month, while 63 percent said that conditions had worsened, the New York Fed said.

“While current conditions remained extremely weak, firms grew more optimistic that conditions would be better six months from now,” it added.

Survey details

The new orders and shipments indexes also increased, but remained well below zero at -42.4 and -39.0, respectively, pointing to another month of “significant declines” in orders and shipments. 

Delivery times were slightly shorter than last month, and inventories were slightly lower.

After plunging in April, the index for number of employees increased nearly 50 points to -6.1, suggesting that after declining sharply last month, employment levels “fell somewhat further” in May, the New York Fed said. 

The average-workweek index, measured at -21.6, pointed to ongoing declines in hours worked, despite not being as negative as the April reading.

Price indexes were little changed from last month. At 4.1, the prices-paid index indicated “modest” selling-price increases, while the prices-received index stood at -7.4, pointing to a second consecutive monthly decline in selling prices.

Overall, firms expected business conditions to be better in six months. 

The index for future business conditions rose 22 points to 29.1. The indexes for future new orders and future shipments also posted “significant” increases. 

Indexes for future employment and the average workweek remained “modestly positive.” 

The capital-expenditures and technology-spending indexes both remained below zero, a sign that firms “planned to reduce both kinds of spending,” the New York Fed said.

The New York Fed distributes the Empire State Manufacturing Survey on the first day of each month to the same pool of about 200 manufacturing executives in New York. On average, about 100 executives return responses.