So much for that rebound. After two months of positive prints that ended seven straight negative readings, today’s report on manufacturing activity for the New York region in the month of May saw a relatively large reversal to the downside. While economists were forecasting the headline print of the Empire Manufacturing report to come in at 6.5, the actual reading was -9.02, which was down from April’s reading of 9.56. Relative to expectations, it was the biggest miss since last August, and in terms of the m/m decline (-18.58), it was the largest since October 2014. While the weakness in this month’s report is no doubt disappointing for anyone hoping the recent rebound had legs, we would point out that this index is one of the more volatile economic indicators we track, so there’s always the possibility that it rebounds next month.
In addition to the weak headline reading, the internals of the May Empire Manufacturing report were also weak with big declines in New Orders (-16.7) and Shipments (-12.1). The only category that showed an increase in May was Number of Employees which saw a marginal increase of 1.9 up to 2.1.
Finally, like the reversals seen in the headline reading and most of its internals, plans for cap ex and technology spending also reversed much of their recent gains. In fact, the index of plans to spend on cap expenditures fell to its lowest level since February 2014.