2012.06.04 16:15:05 NY May Business Conditions Index Plunges

New York City business activity came to a "screeching halt" in May, according to a report released Monday. The Institute for Supply Management-New York's Current Business Conditions index fell sharply to 49.9 in May from 61.2 in April. It was the first contractionary reading since November. The 11.3-point decline was the biggest monthly point drop in three years. An index reading above 50 indicates a faster pace of activity while a reading below 50 indicates a slower or contracting rate. The six-month outlook index fell by a much-smaller amount, dropping to 60.2 from 63.1, which suggests "any slowdown might be temporary," the report said. Among the subindexes, the ISM-NY's employment index dropped to 48.4 in May from 53.8 in April. The purchasing-volume index slipped to 53.3 from 54.1. Cost pressures eased last month. The prices-paid index fell to 57.8 from 61.8. The April index was the highest reading in 11 months. Despite the weak top-line reading, when firms were asked about business impediments, "no difficulties' was the most popular response, with 36% of respondents giving that answer, in May. In a series of special questions, the ISM-NY asked about profit. When firms were asked about their profit outlook for the rest of the year, 63% thought profit would increase, down from 71% saying that in May 2011 when the profit questions were last asked. Meanwhile, 3% thought profits would decline at a faster pace for the rest of the year, up from no one saying that a year earlier. The ISM-NY releases its activity report, which comprises mainly nonmanufacturers, one business day before the national ISM nonmanufacturing report, which is typically released on the third business day of each month. Write to Kathleen Madigan at kathleen.madigan@dowjones.com (END) Dow Jones Newswires June 04, 2012 10:15 ET (14:15 GMT)