New York Manufacturing Activity Unexpectedly Contracts In June

Manufacturing activity in New York took a sharp downward turn in the month of June, according to a report released by the Federal Reserve Bank of New York on Monday, with the index of activity in the sector showing a record monthly decline.

The New York Fed said its general business conditions index plunged to a negative 8.6 in June from a positive 17.8 in May, with a negative reading indicating a contraction in manufacturing activity. Economists had expected the index to drop to a positive 10.0.

With the much bigger than expected decrease, the general business conditions index recorded its first negative reading in over two years.

The nosedive by the headline index was partly due to a downturn in new orders, with the new orders index plummeting to a negative 12.0 in June from a positive 9.7 in May.

The shipments index also tumbled to 9.7 in June from 16.3 in May, although the positive reading still indicated growth.

The report said the number of employees index turned negative first the first time in over two years, slumping to a negative 3.5 in June from a positive 4.7 in May.

The prices received index also slid to 6.8 in June from 12.4 in May, while the prices paid index inched up to 27.8 from 26.2 in the previous month.

Looking ahead, the New York Fed said the indexes assessing the six-month outlook were generally lower than last month, with the index for future business conditions falling to 25.7 in June from 30.6 in May.

The Federal Reserve Bank of Philadelphia is scheduled to release its report on regional manufacturing activity in the month of June on Thursday.

The Philly Fed Index is expected to drop to 11.5 in June after jumping to 16.6 in May, with a positive reading indicating growth in manufacturing activity.