After jumping to a more than three-year high in the previous month, the New York Federal Reserve’s index of regional manufacturing activity showed a modest pullback in the month of May.

The New York Fed released a report on Monday showing its general business conditions index dipped to 24.3 in May from 26.3 in April, although a positive reading still indicates growth in regional manufacturing activity.

Economists had expected the index to slip to 23.9 after reaching its highest level since October of 2017 in the previous month.

The modest decrease by the headline index came even though the new orders rose to 28.9 in May from 26.9 in April and the shipments index climbed to 29.7 in May from 25.0 in April.

Meanwhile, the New York Fed said the number of employees index edged down to 13.6 in May from 13.9 in the previous month.

The inventories index also slid to 7.1 in May from 11.6 in April, although the positive reading still indicates inventories moved somewhat higher.

The report also showed the prices price index advanced to 83.5 in May from 74.7 in April, while the prices received index rose to 37.1 in May from 34.9 in April.

Looking ahead, the New York Fed said firms remained optimistic that conditions would improve over the next six months.

The index for future business conditions fell to 36.6 in May from 39.8 in April but continues to indicate optimism, with firms expecting significant increases in employment and prices.

“Healthy goods demand, rising business investment, reviving global activity, and fiscal stimulus will keep US manufacturing advancing at a solid clip through the rest of 2021,” predicted Oren Klachkin, Lead U.S. Economist at Oxford Economics.

On Thursday, the Philadelphia Federal Reserve is scheduled to release its report on regional manufacturing activity in the month of May.

The Philly Fed Index is expected to pull back to 43.0 in May after reaching a nearly 50-year high of 50.2 in April.

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