The numbers: The New York Fed’s Empire State business conditions index, a gauge of manufacturing activity in the state, plunged 42.6 points in May to negative 31.8, the regional Fed bank said Monday.
Economists had expected a reading of negative 5, according to a survey by the Wall Street Journal.
Any reading below zero indicates deteriorating conditions.
Key details: The index for new orders dropped 53.1 points to negative 28 in May, reversing completely a sharp 46.7 point gain in April.
The shipments index fell 40.3 points to negative 16.4, almost reversing a 37.3 gain in the prior month.
Unfilled orders fell 13.2 points to negative 13.2
The measure of expectations six months ahead ticked up 3.2 points to 9.8 in May.
Big picture: Last month, the Empire State index exceeded expectations and jumped 35.4 points to 10.8. Today’s decline wiped out all that improvement and adds to fears about a recession.
The recent volatility in the data has been a puzzle for economists. In general, there is widespread pessimism about the manufacturing sector. Higher interest rates have cooled capital spending and overseas activity has been tepid. Even China’s reopening from COVID has not been a spark for manufacturing that many expected.
Market reaction: Stocks
DJIA,
TMUBMUSD10Y,
were set to open higher on Monday while the yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.5%.
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