A key Empire State manufacturing index fell to its lowest level since the Great Recession — not including the pandemic — due to a decrease in orders, shipments, and payroll at factories, according to a survey conducted by the Federal Reserve Bank of New York.
New York’s general business conditions index for May dropped to negative-31.8, exceeding only the minus-38.2 suffered in early 2009 as the economy was coming out of the recession caused by the mortgage crisis, the survey shows.
The gauge had cratered to a minus-80 at the height of the pandemic when lockdowns halted production.
The survey, a leading indicator for the state, goes out to 200 manufacturing executives in New York monthly.
Any reading below zero is thought to be indicative of economic contraction.
The New York Fed said Monday its barometer of manufacturing activity is extremely volatile, making it harder to interpret.
The general business conditions index plummeted 42.6 points from the previous month to fall into negative territory, the largest single-month drop since the pandemic.
The troubling May data followed a 35.4-point surge in April, which had lifted the index to a positive reading of 10.8.
Economists polled by Reuters had forecast the index to sag just -3.75.
The number of orders fell by the most since April 2020 — and the lowest since the start of the year.
The gauge measuring shipments also dropped more than 40 points, according to the survey.
The New York 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.
Almost half of the businesses that participated in the survey said economic conditions in the state have worsened.
Goldman Sachs 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 on Tuesday will 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.
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.
According to the National Association of Manufacturers, manufacturers accounted for 4.01% of New York state’s total economic output in 2019, generating $71.06 billion while employing 400,000 people.
With Post wires
This story originally appeared on NYPost
