“Empire State Index Plunges in May: NY Manufacturing Industry Records Sharp Decline”

The manufacturing industry in the New York region recorded a very sharp decline in May, after an upturn in April, but weakening under the effect in particular of a sharp drop in new orders and employment, the economy slowing under the effect of rate hikes.

The index measuring the evolution of manufacturing activity in this highly industrialized region plunged 43 points in May compared to April, falling to -31.8, according to the monthly Empire State survey, published Monday by the antenna of New York from the American central bank (Fed) and carried out with industrialists in the region.

Analysts expected a much less pronounced decline, and saw the index fall to -1.8 only, according to the consensus of Briefing.com.

“Manufacturing activity has fallen significantly in New York State,” said the Fed.

“New orders and shipments plunged after surging significantly last month. Delivery times have shortened somewhat and stocks have shrunk,” the central bank said.

As for the rise in prices, it remained substantially identical to that of the previous month.

But companies in the sector have slowed down their investment plans and still expect “little improvement in conditions over the next six months”.

As for the conditions of employment, they continue to deteriorate. Thus, the index measuring the number of employees remained negative, for the 4th month in a row, while that measuring the hours worked fell below the zero mark, which indicates a “slight decline” in employment. and the number of hours worked.

To curb high inflation, the Fed has, since March 2022, raised its main key rate by 5 points, from 0 to 0.25%, to 5.00-5.25%. This leads banks to raise the cost of the loans they offer to households and businesses, to weigh on consumption and investment.

However, inflation only fell slightly in April in the United States, to 4.9% over one year against 5.0% in March, according to the CPI index. Over one month, however, it rebounded to 0.4% against 0.1% in March.

The risk is to see the economy slow down too much, or even fall into recession. Companies, anticipating this, are slowing down their investments and their orders, which weighs on industrial production.