Empire State Manufacturing Index Contracts

The May 2016 Empire State Manufacturing Survey indicates that business activity declined for New York manufacturers. The headline general business conditions index turned negative, falling nineteen points to -9.0. The new orders and shipments indexes also fell below zero, pointing to a decline in both orders and shipments. Survey results indicated that inventory levels were lower and delivery times shorter.

The prices paid index edged down to 16.7—a sign that moderate input price increases were continuing—and the prices received index fell below zero, suggesting a small drop in selling prices. Employment levels appeared to be little changed, while the average workweek index pointed to a decline in hours worked. The six-month outlook was somewhat less optimistic than in April, and the capital spending index plummeted to 3.1, its lowest reading in more than two years.

Business Conditions Worsen

Business activity contracted for New York manufacturing firms, according to the May 2016 survey. Following a brief foray into positive territory in March and April, the general business conditions index fell back below zero, declining nineteen points to -9.0. Nineteen percent of respondents reported that conditions had improved over the month, while 28 percent reported that conditions had worsened. The new orders index also turned negative, its seventeen- point drop to -5.5 signaling a decrease in orders. The shipments index, down twelve points to -1.9, showed that shipments were flat, and the unfilled orders index fell to -6.3. The delivery time index, at -6.3, pointed to shorter delivery times, and the inventories index, at -7.3, suggested that inven- tory levels were lower.

Employment Levels Hold Steady, While the Workweek Declines

The prices paid index edged down three points to 16.7, an indication that input prices continued to increase at a moderate pace. The prices received index fell six points, to -3.1, as selling prices moved slightly lower. Employ- ment levels remained fairly steady, with the index for number of employ- ees showing little change at 2.1, while the average workweek index declined ten points to -8.3—evidence that the average workweek was shorter this month.

Capital Spending Index Falls Sharply

Indexes for the six-month outlook generally suggested that firms were somewhat less optimistic about future conditions than they were in April. The index for future business con- ditions was little changed at 28.5, while the index for future new orders fell fourteen points to 22.4. Future employment indexes conveyed an expectation that employment levels and the average workweek would rise modestly over the next six months. The capital expenditures index fell nineteen points to 3.1, its lowest level in more than two years, and the tech- nology spending index fell to 6.3.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell