From the NY Fed:
The Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to improve for a tenth consecutive month in May, albeit at a slower pace than in April. The general business conditions index fell 13 points, to 19.1. Similarly, the new orders and shipments indexes also moved lower but remained at positive levels. The inventories index dropped back to a level near zero after rising into positive territory in March and April. The prices paid index continued to climb, reaching its highest level of the year, while the prices received index was little changed and positive. The index for number of employees rose for a fifth consecutive month, reaching its highest level since 2004. Future indexes suggest that activity is expected to expand further in the months ahead, but the level of optimism was noticeably lower in May than in recent months.
As the chart shows, the number is still positive and doing well. We'll have to wait and see if the euro situation will start to hit the manufacturing numbers -- especially those on the East Coast. My guess is part of the recent drop in the Empire number is probably related to Europe, but that's just a hunch at this point.
However, future activity will probably be muted:
Construction of new homes rose more than expected in April but new building permits fell sharply, signaling the industry's rebound could be short-lived.
The results show builders ramped up to meet demand from buyers seeking to take advantage of federal tax incentives, but are now scaling back their plans.
Building permits, a gauge of future activity, sank 11.5 percent to an annual rate of 606,000, the lowest since October 2009, the Commerce Department said Tuesday. Analysts were expecting a slight dip to a rate of 680,000.
Home sales have rebounded this year. They were helped by low mortgage rates and two government tax credits — $8,000 for new buyers and $6,500 for current owners who buy and move into another property. To receive the tax credit, borrowers had to have a signed offer by April 30 and must close the deal by the end of June.
Starts are up but permits are down. I think we'll continue to see the same level of housing starts for the next year that we've seen for the last year and a half.