New York Manufacturing Activity Unexpectedly Contracts In May

Activity in the New York manufacturing sector has unexpectedly seen a modest contraction in the month of May, according to a report released by the Federal Reserve Bank of New York on Monday.

The New York Fed said its general business conditions index fell to a negative 1.0 in May from a positive 5.2 in April, with a negative reading indicating a contraction in regional manufacturing activity.

The index's pullback into negative territory came as a surprise to economists, who had expected the index to rise to a positive 7.0.

The unexpected decrease by the headline index partly reflected a downturn in new orders, as the new orders index slumped to a negative 4.4 in May from a positive 7.0 in April.

The shipments index also dropped to 10.6 in May from 13.7 in April, indicating that shipments increased at a slower pace.

The report said the number of employees index also dipped to 11.9 in May from 13.9 in April, suggesting slightly slower job growth.

On the inflation front, the prices paid index tumbled to 20.9 in May from 32.8 in April, while the prices received index slid to 4.5 from 12.4.

The New York Fed said firms remained optimistic about future conditions, however, as the index for future business conditions was nearly flat at 39.3.

Thursday morning, the Philadelphia Federal Reserve is scheduled to release its report on regional manufacturing activity. The Philly Fed Index is expected to dip to 19.8 in May from 22.0 in April.