Manufacturing in New York state shrank for the first time in seven months in May, as new orders fell and shipments grew more slowly.
The Federal Reserve Bank of New York said Monday that its Empire State manufacturing index dropped last month to minus 1, from 5.2 in April. Any reading below zero signals contraction.
The index measures sentiment in New York, but is followed by economists because it provides an early read on factory output nationwide. U.S. factories have been expanding since the fall, after an 18-month slump caused by low oil prices, which lowered demand for drilling equipment.
The new orders index tumbled to minus 4.4 from 7, while the shipments index declined to 10.6 from 13.7. A gauge of hiring slipped to 11.9, still a solid reading, from 13.9.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the index’s decline was “disappointing, but not disastrous.”