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Empire State Manufacturing Index Rises To 3.1 In May

Editor's Note: The article was updated to include more information from the report. The report was updated a second time to include comments from TD Securities.

The manufacturing sector in the New York region is finding some momentum this month, reversing some of the weakness in April but still coming in below expectations, according to the latest data from the New York Federal Reserve.

The general business conditions index in the Empire State manufacturing survey rose to a reading of 3.1 in May, compared to April’s reading of negative 1.2. According to consensus estimates, economists were expecting to see a strong rise in the region’s manufacturing sector, forecasting a reading around 5.1.

Although current conditions are slightly more positive the report said that the business outlook as weakened.

“The index for future general business conditions fell noticeably, reflecting a positive but less favorable outlook than in April,” the report said.

Looking at the components of the data, the report said the new orders index rose 10 points to 3.9% and the shipment increase was relatively unchanged at 14.9.

The labor market continued to show some improvement, albeit at a slower pace, the report said that the employment index came in at 5.21, weaker than the expectations for a reading of 9.57.

Although the index is back in positive territory, Millan Mulraine, deputy head of U.S. strategy at TD Securities, said that the data points to a marginal recovery in the manufacturing sector, after a slow start at the beginning of the year.

“It suggests that growth momentum in the manufacturing sector has rebounded only marginally, which is a far cry from the spectacular bounce in activity seen last year. In effect, the tone of this report is broadly consistent with the emerging narrative of a weak GDP performance in Q2, with growth on track for a sub-2.0% print,” he said.



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