Key Manufacturing Gauge Shows Sharp Gain
New York manufacturers plan to expand at a pace not seen since 2010, though hiring plans dimmed and prices received showed a sharp drop.
The Empire State Manufacturing Survey produced a January reading of 19.5, well above analyst expectations for a 15 and indicative that business conditions improved significantly. January's reading was 13.48.
It was the highest level since June 2010. The index has bounced back strongly from a summer slump as the region contracted alongside a broader manufacturing slowdown.
"Activity has been recorded as having expanded with increasing momentum for the third month," said Vimombi Nshom, an economist at IFR Economics. "Most of the conditions that had posted large gains in January — like prices received, new orders, and employment — were still positive, but to a smaller degree given the extent of last month's movement."
The news did not move stock market futures, which had indicated a higher market open based on hopes that China would help solve the euro zone debt crisis.
The employment index for the month fell to 11.76 from 12.09 the previous month, while prices received plunged from 23.08 to 15.29 even though the prices paid index held steady at 25.9. Measures of new orders and shipments were positive and little changed from December.
In response to a separate question, about 46 percent of respondents said they plan capital spending increases, while 25 percent said they did not. The results mirror those from a year ago.
The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.
"It's better-than-expected and consistent with the idea that the U.S. economy is picking up steam as the year gets started," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
The new orders index slipped to 9.73 from 13.70, while inventories dropped to minus 4.71 from 6.59.
Manufacturers were slightly less optimistic about the coming months with the index of business conditions six months ahead falling to 50.38 from 54.87.