The Empire State Manufacturing Survey indicates that conditions for New York manufacturers worsened only modestly in May. Although negative, the general business conditions index rose 10 points to -4.6, its highest level since August of last year. The new orders index fell several points and remained below zero, while the shipments index inched into positive territory. The inventories index remained negative, but rose from last month’s record low. Price indexes also continued to be negative, with the prices received index falling 10 points to a record low. Employment indexes indicated further contraction in employment levels and in the average workweek. Future indexes improved substantially for a second consecutive month; the future general business conditions index rose 11 points to its highest level since September.
Let's take a look at the accompanying charts:
The general business index has risen two months in a row and is currently at levels last seen in July and August of last year. New orders spiked last month but retreated this month. This months retreat looks like people backed off after a big increase in the previous month. In other words, it's a natural move lower after increased activity.
The shipments index has increased two months in a row as has the unfilled orders index. The unfilled orders index is a good sign as it indicates there is a backlog of work for people to do.
The bottom line is the last two months of NY Fed reports have been encouraging.