From Holden:

As New York goes, so goes the nation? Perhaps not, but negative growth in New York State’s manufacturing segment cannot be spun as a sign of a healthy economy.

Growth at New York state factories turned negative in May as the New York Federal Reserve Bank’s “Empire State” index slipped to a two-year low for the second consecutive month.

The May headline index defied forecasts for an increase and instead slipped to -11.11 — below the zero threshold that delineates growth from contraction in the survey. The New York Fed also revised the April figure downward to 2.03 from 3.12 last month. The median forecast in a Reuters survey of economists last week had pegged the May number at 10.5.

“The general business conditions index dropped fairly sharply for the second month in a row,” the New York Fed said in a statement, adding that nearly a third of respondents — up from 23 percent last month — reported that business conditions had deteriorated.

“This is awful. The survey is much weaker than we expected, and it supports our view that the soft patch is not over,” said to a research report by High Frequency Economics issued after the report was made public.

Conversely, the percentage of those who said conditions improved slipped in May to 21 percent from 25 percent in April.

The indexes for new and unfilled orders also slipped into negative territory and the number of employees index, while still positive, fell to its lowest level in two and a half years.

The new orders index fell to -7.08 and the April figure, which was originally just a nose above zero at 0.22, was downwardly revised to -1.22.

Shipments remained barely positive in May at 0.79, but the April figure was downwardly revised to 0.95 from an initial reading of 0.03.

The number of employees index in May, at 0.16, was barely positive, falling sharply from the April reading of 8.50.