Empire State Manufacturing Survey Levels Off in May

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The Empire State Manufacturing Survey, the New York Fed’s gauge of factory activity in the region, leveled off in May, though Labor Market conditions improved. Despite the decline, firms remained optimistic about future business conditions.

The headline general business conditions index fell 6 points to -1.0, while new orders index fell to -4.4. That indicates a small decline in orders and the shipments index also edged down to 10.6, suggesting that shipments increased at a slightly slower pace than in April.

Labor market indicators pointed to a modest increase in both employment and hours worked, and input prices and selling prices rose at a more moderate pace. Indexes assessing the six-month outlook were close to last month’s levels, and continued to convey a high degree of optimism about future conditions.

The index for number of employees edged down to 11.9, and the average workweek index was little changed at 7.5. Price increases slowed: The prices paid index fell twelve points to 20.9, its lowest level since November, and the prices received index moved down eight points to 4.5.

The slowdown in the Empire State Manufacturing Survey is ironically not a bad thing because supply constraints can now get a burden reduction they desperately needed. On Thursday, the Philadelphia Federal Reserve will release their survey, which is expected to show strong growth.

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