Manufacturing activity in New York State unexpectedly shrank in May, according to the results of a key regional factory survey released on Wednesday.
This was the first time since January that the closely-watched measure had shown contraction. Economists had generally expected the figures to show accelerated growth compared to last month.
The survey also contained some worrisome signs for job growth. It indicated that New York manufacturers added fewer employees in May compared April, and that they cut back on workers' hours during the month.
The Federal Reserve Bank of New York said its Empire State Manufacturing Index came in at a negative 1.4 for May. This was down from a positive 3.1 in the previous month. Economists had expected the index to rise to a reading of positive 3.75.
The Empire State Index measures manufacturing activity in New York State. Any reading above zero indicates expansion. The survey is considered a key regional factory survey, providing an important look at the health of the manufacturing sector.
The Empire State Index had languished in negative territory for most of the second half of last year, slipping below zero in August and remaining there through this January. The measure jumped into positive territory in February, but has drifted lower again since. May's result marks the first return to a negative reading in four months.
The slide came on a decline in new orders. The index measuring this component slipped to negative 1.17 for May, compared to a reading of positive 2.2 in April.
Shipments also showed a mild contraction in the month.
The inflation part of the Empire State survey indicated slower growth in prices. The Prices Paid Index ticked down to 20.45 in May after a reading of 28.41 in April. Meanwhile, the Prices Received Index dipped to 4.55 from 5.68.
On the jobs front, growth in hiring slowed in the month, as New York manufacturers added fewer employees in May. The survey's Number of Employees Index ticked down to 5.68 from 6.82 in April.
Manufacturers also cut back the number of hours employees worked. The index measuring the average employee workweek slipped to negative 1.14 in May. This compared to a reading of positive 5.68 in April.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.