By Xavier Fontdegloria

The contraction of manufacturing activity across the central Atlantic region of the U.S. moderated in May as lockdowns were eased and economic activity restarted, data from a report compiled by the Federal Reserve Bank of Richmond showed Wednesday.

The Fifth District Survey of Manufacturing Activity's May composite index was minus 27, up from a record low of minus 53 in April, when the reading registered its sharpest monthly drop since the survey began in November 1993.

Economists polled by Dow Jones Newswires had expected the index to be at a lower level of minus 40.

The indicator is compiled by surveying manufacturing firms across the Fifth Federal Reserve District, which encompasses the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. Positive readings signal expansion, while negative readings indicate contraction.

All three components of the index -- shipments, new orders and employment -- were above their April readings but still in contraction territory, data showed.

The index tracking shipments increased to minus 26 in May from minus 70 in April, and the reading for new orders was up to minus 35 compared with minus 61 in the previous month.

"The index for local business conditions was also negative, but contacts expected conditions to improve in the next six months," the report said.

For employment, the conditions improved somewhat compared with April in terms of number of employees, availability of skills needed and average workweek. The wages subindex fell to minus 3 compared with April's zero reading. All of them were in contraction territory.

"Many survey participants reported decreases in employment and the average workweek in May. However, the indexes for wages and the availability of workers with the necessary skills were both close to 0. Respondents expected to see increases in both wages and available skills in the coming months," the Richmond Fed said.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

May 27, 2020 10:30 ET (14:30 GMT)