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The Empire State Manufacturing Survey's general business conditions index stood at minus 48.5 in May, up from the minus 78.2 April's reading, which posted the lowest level in the almost two decade history of the survey.
Economists polled by The Wall Street Journal had expected the indicator to be at a lower level of minus 60.0.
Participants from across the state in a variety of industries respond to a questionnaire and report the change in several indicators from the previous month. The survey is sent to the same pool of about 200 manufacturing executives in New York state. A positive index reading means activity is expanding, while a negative reading indicates contraction.
Sixty-three percent of respondents in the survey conducted between May 4 and May 10 said conditions had worsened in the month, while 15% said conditions improved.
While the general business conditions index climbed thirty points from the record low set last month, it is still the second worst reading in the survey's history. "Business activity continued to deteriorate significantly," the report said.
The new orders and shipments indexes also increased, but remained well below zero at minus 42.4 and minus 39.0, respectively, pointing to another month of significant declines in both categories.
The index for number of employees increased nearly 50 points to minus 6.1, suggesting that after declining sharply last month, employment levels fell somewhat further in May, data showed.
Firms also expected business conditions to be better in six months, as the index for future business conditions rose 22 points, to 29.1. "While current conditions remained extremely weak, firms grew more optimistic that conditions would be better six months from now," the Federal Reserve Bank of New York said.
Write to Xavier Fontdegloria at email@example.com