NY Empire State index shows activity continued to decline sharply in May

The New York Fed’s Empire State business conditions index rose 29.7 points to -48.5 in May, the regional Fed bank said Friday. This is the second lowest reading on record. Economists had expected a reading of -65, according to a survey by Econoday.

Any reading below zero indicates deteriorating conditions.

What happened: Fifteen percent of manufacturers reported that conditions were better in May than April

New orders and shipments continued to decline though not as steeply as in April.

The new-orders index rose 23.9 points to -42.4 in May while shipments rose 29.1 points to -39. Optimism about the six-month outlook did improve. The index for future business conditions rose 22 points to 29.1.

Employment levels fell further in May but not at the sharp pace of April. The index for number of employees rose almost 50 points to -6.1. Hours worked continued to decline.

Big picture: Some economists were saying the rebound showed that April was the bottom for manufacturing, while others said that was reading too much into the data. The latter economists pointed out that some of the improvement in May came from firms reporting that activity was unchanged at zero after reporting steep declines in April.