WASHINGTON (Reuters) - The New York Federal Reserve said on Monday its barometer of manufacturing activity in New York State plunged in May, but the survey is extremely volatile, making it harder to interpret.
The regional Fed's "Empire State" index on current business conditions plummeted 42.6 points to -31.8 this month. A reading below zero signals the New York manufacturing sector is contracting. The slump followed a 35.4 points surge in April, which had lifted the index to a positive reading of 10.8.
Economists polled by Reuters had forecast the index at -3.75.
Goldman Sachs (NYSE:GS) noted that the survey "has been particularly volatile since 2022, swinging by at least 20 points in over half of instances."
Nevertheless, higher interest rates and the rotation of spending back to services from goods is hurting national manufacturing activity. Tighter credit conditions are also seen as a drag. The New York Fed will on Tuesday publish a survey focusing on credit access and credit conditions.
The Institute for Supply Management's measure of national manufacturing activity has contracted for six straight months
The New Fed survey's gauge of new orders slumped 53.1 points this month to -28.0, while the shipments measure dropped 40.3 points to -16.4. Though manufacturing employment continued to pull off recent lows, it remained depressed. Inflation at the factory gate continued to slow.
Businesses did not expect a significant improvement in conditions over the next six months. The survey's measure of future business conditions rose to 9.8 from 6.6 in April.