New York Manufacturing Activity Expands At Faster Pace In February

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Conditions for New York manufacturers improved at a healthy pace in February, according to a report released by the Federal Reserve Bank of New York on Tuesday, with the index of regional manufacturing activity rising by much more than anticipated.

The New York Fed said its index of activity in the manufacturing sector rose to 24.9 in February from 15.9 in January, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase by the index to a reading of 18.0.

With the increase, the index rose to its highest level since coming in at 33.4 in October of 2009, remaining positive for the seventh consecutive month.

The improvement in the sector came despite a slower pace of growth in both new orders and shipments. The new orders index fell to 8.8 in February from 20.5 in January, while the shipments index slipped to 15.1 from 21.1 in the previous month.

On the other hand, the inventories index surged up to a reading of 0.0 in February from a negative 17.3 in the previous month. The index rose to its highest level since August of 2008, with the New York Fed noting than more than a quarter of respondents reported rising inventory levels.

The report also showed that the number of employees index edged up to 5.6 in February from 4.0 in January, indicating a modest acceleration in the pace of employment growth in the sector.

While the headline index of activity in the sector increased by much more than expected, Paul Ashworth, Senior U.S. Economist at Capital Economics, said the index "isn't half as good as it looks."

"Even at this level, the index is still relatively depressed compared with the more upbeat, and more closely watched, national ISM manufacturing index," Ashworth said.

He added, "This latest improvement in the Empire State just makes it less downbeat than the ISM, it does not suggest that the recovery in the factory sector is any stronger than we already thought."

On the inflation front, the report showed that the prices paid index edged down to 31.9 in February from 32.0 in January, while the prices received index rose to 4.2 from 2.7 in the previous month.

The New York Fed also said that the future indexes suggest that New York manufacturers expect conditions to improve further in the months ahead.

The future general business conditions index slipped to 52.8 in February from 56.0 in January, although the New York Fed noted that 60 percent of respondents expect conditions to improve over the next six months.

Thursday morning, the Federal Reserve Bank of Philadelphia is due to release its regional report on activity in the manufacturing sector. The Philly Fed index is expected to edge up to a reading of 17.0 in February from a reading of 15.2 in January.

Conditions for New York manufacturers improved at a healthy pace in February, according to a report released by the Federal Reserve Bank of New York on Tuesday, with the index of regional manufacturing activity rising by much more than anticipated. The New York Fed said its index of activity in the manufacturing sector rose to 24.9 in February from 15.9 in January, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase by the index. (Market News Provided by RTTNews)