Empire State manufacturing index slips in May

Manufacturing activity in the New York Fed's jurisdiction cooled perceptibly in May amid sharp falls in gauges for new and unfilled orders.

The New York Fed's so-called 'Empire State' index retreated from a reading of 5.2 in April to -1.0 for May, easily undershooting forecasts for a reading of 7.0.

A gauge of firms' new orders slipped from 7.0 to -4.4 alongside a dip in another linked to unfilled orders from 12.4 to -3.7.

In March the new orders gauge hit 21.3.

Price pressures were also weaker, with the corresponding subindex for prices paid by companies decreasing from 32.8 to 20.9 and another for prices received moving lower from 12.4 to 4.5.

Employment indicators contained in the same report also weakened, with a sub-index tracking the number of staff at firms down from 13.0 to 11.9 and another linked to the length of the average employee workweek decreasing from 8.8 to 7.5.

According to Ian Shepherdson, chief economist at Pantheon Macroeconomics, the industrial economy continued to be on course to recover thanks to a gentle recovery in investment in the oil patch. Furthermore, 'payback' from the warm winter weather which boosted activity in previous months was to be expected.

"Nonetheless, this is a weaker report than we expected. The Philly Fed and Chicago PMI reports are better indicators of national trends, most of the time, so we're keen to see their May readings. This report, in isolation, is no reason to panic."