May Empire Manufacturing Survey Mixed, But Employment, Cap. Expenditures at Multiyear Highs

"The Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to improve for a tenth consecutive month in May, albeit at a slower pace than in April. The general business conditions index fell 13 points, to 19.1 (see top chart above). Similarly, the new orders and shipments indexes also moved lower but remained at positive levels. The inventories index dropped back to a level near zero after rising into positive territory in March and April.

The prices paid index continued to climb, reaching its highest level of the year, while the prices received index was little changed and positive. The index for number of employees rose for a fifth consecutive month, reaching its highest level since 2004 (see bottom chart above). Future indexes suggest that activity is expected to expand further in the months ahead, but the level of optimism was noticeably lower in May than in recent months (see top chart). The capital expenditures index advanced several points to 38.2, a multiyear high (see bottom chart)."

MP: While the May manufacturing report for the New York Fed region was somewhat mixed, the employment and capital expenditure indexes were especially strong in May, with the employment index reaching a six-year high, and the capital expenditure index at the highest level since late 2006. Since concerns about employment remain elevated, this strong reading for manufacturing employment in the NY Fed area suggests that jobs are slowly, but consistently returning to the manufacturing sector.