Empire State manufacturing index hits six-month high
Manufacturing activity in the New York Fed’s jurisdiction unexpectedly improved in May, to a six-month high, according to data released on Wednesday.
The New York Fed’s Empire State index rose to 17.8 from 10.1 in May, beating expectations for a reading of 8.5.
According to the survey, 36% of respondents reported that conditions had improved over the month, while 18% said conditions had worsened.
The new orders index rose two points to 9.2, while the shipments index increased by eight points to 16.3. The unfilled orders index improved to 2.1 from -0.7 in April but the gauge for inventories dropped to -4.1 from 8.4.
Meanwhile, optimism about the six-month outlook improved, with the index for future business conditions up 18 points at 30.6.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "This was a tricky call; the national ISM manufacturing survey appeared to point to a decline, but China’s PMIs, which lead the Empire State, signalled a clear increase.
"The Empire State index is dead in line with the message from China’s numbers, though note that the details of the survey aren’t as good as the headline. Orders rose 2.2 points, and shipments jumped 7.7 points, but employment fell by 7.2 points. All these numbers are volatile month-to-month, but overall the sub-indexes were a bit weaker than in April, despite the headline jump. Even so, they point to a rebound in the ISM to about 55-to-56, after its disconcerting and unexpected drop to 52.8 in April.
"In short, we think the downturn in manufacturing is over - assuming a reasonably quick resolution to the trade war with China - but a sustained upturn has not yet begun."