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The Federal Reserve Bank of New York has released its Empire Manufacturing Survey for the month of May, and it is a wonder that the news did not weigh more on the markets. One saving grace here is that this report might be viewed by the financial markets solely as a one-off regional report. That being said, it was the first time that the “general business conditions” index was negative since late in 2017.

May’s reading was −1.0 in the general business conditions, down from a positive 5.1 in April. What really looked weak on the surface was that Bloomberg had a consensus estimate of 8.0. As the Econoday range was 5.0 to 10.0, every single economist was caught off guard here.

Manufacturing activity in the New York Federal Reserve Bank’s region appears to be flattening out after a multi-month series of strong growth. New orders also went red by falling to −4.4 in May. Even the unfilled orders went in the red by falling to −3.7, after strong numbers had been seen in April and in March.

One area that remained positive was the strength in prior orders helping to prop up production. This barometer was up at 10.6 in May. Hiring was also strong at 11.9 in May, down just two points from the two-year high that had been measured in April.

Delivery times continued to slow, which actually may lead to easing pressure on the supply chain. Inventories were flat, while the gain in price pressures looks lighter than in prior months. Additional numbers were shown by the New York Fed as follows:

• Some 26% of respondents reported that conditions had improved over the month, while 27% reported that conditions had worsened.
• The delivery time index fell nine points to 6.7.
• The inventories index fell to −0.7.
• The index for number of employees edged down to 11.9.
• The average workweek index was little changed at 7.5.
• The prices paid index fell 12 points to 20.9.
• The prices received index moved down eight points to 4.5.
• The index for future business conditions held steady at 39.3.
• The capital expenditures index fell 14 points to 13.4.
• The technology spending index also came in at 13.4.

While the markets are so far ignoring the report, it does at least soften some strong expectations for Thursday’s Philly Fed manufacturing report and may soften some expectations for the industrial production report on Tuesday.

The Empire State Manufacturing Survey is sent out by the New York Fed on the first day of each month to the same pool of about 200 manufacturing executives in New York State. These are typically the president or CEO of the company. Roughly 100 responses are received for each report. Most of the surveys are completed by the 10th of each month and they are accepted until the 15th.