NY Fed - Manufacturing Activity in New York Takes A Dive Down
According to the latest data from New York's Federal Reserve, the manufacturing activity in the NY state took a hit during May. However, the overall survey is very volatile which makes it hard to get a clear picture.
The Empire State index, which focuses on the current business conditions also went down by 42.6 points. This led the empire state index to touch a -31.8 value this month.
In general, a reading below zero means a contraction in the manufacturing sector of New York. But what's even strange is that the same index gained 35.4 points in April which made the index reach 10.8 reading.
For the most part, the economists were forecasting the index to reach -3.75, but the actual value turned out to be -31.8. No matter how you look at it, that's a lot of difference.
A Very Volatile Reading
According to Goldman Sachs (GS), the recent survey shows a lot of volatility. In fact, such a high volatility was not seen since 2022, when it showed a swing of 20 points.
Overall, there are a lot of factors which led to a decline in NY's manufacturing activity. For starters, the higher interest rates are making it difficult for manufacturers & consumers alike.
In addition, the spending is switching from goods to services which is also putting a drag on manufacturing activity.
The Institute for Supply Management also publishes data about the national manufacturing activity. And just like the index mentioned above, this one also shows some major contraction recently.
The Fed's survey related to new orders also took a hit and went down by 53.1 points to reach a value of -28.0. Furthermore, the shipments measure also decreased by 40.3 points and reached a value of -16.4.
Over all, no significant improvement is expected in the business conditions during the next 6 months. And while we discuss the manufacturing activity, we also can't ignore the effects of inflation and high interest rates.