New York business conditions returned to expansion mode this month, although not as strongly as economists expected, according to data released Friday by the Federal Reserve Bank of New York.
The Empire State's business conditions index edged up to 3.09 in May after falling to -1.19 in April from 6.90 in March.
Economists surveyed by The Wall Street Journal expected the latest index to increase to 5.0. A reading above zero indicates expansion.
The miss in the factory report--while covering only a small geographic area--adds to worries about the firmness of the expansion in the second quarter. Economists already calculate the economy contracted slightly in the first quarter, but the monthly data so far in the spring do not point to a big rebound in activity.
In the New York Fed report, the subindexes were mixed this month.
The new orders index rebounded to 3.85 in May from -6.00 in April. The shipments index was little changed at 14.94 from 15.23.
New York state manufacturers are hiring fewer workers. The employment index slowed to 5.21 from 9.57 in April. The workweek index rebounded only to -2.08 after it plunged to -4.26 last month.
Fewer New York state manufacturers are raising selling prices this month but the increase in input prices fell sharply. The prices-received index fell to 1.04 from 4.26. The prices-paid index dropped to 9.38 from 19.15.
The outlook for the next six months was "less favorable" than in April, the report said. The general business conditions expectations index for the next six months slowed to 29.81 from 37.06 in April. Expectations hit a three-year high reading of 48.35 in January.
New orders expectations were little changed, at 33.94 from 33.57. The employee expectations fell to 16.67 from 22.34.
The New York Fed survey is the first monthly factory report released by regional Fed banks. Economists use the Fed surveys as guideposts to forecast the health of the national industrial sector as captured in the monthly manufacturing report done by the Institute for Supply Management.
(By Kathleen Madigan)