The Federal Reserve Bank of New York’s Empire State Manufacturing Survey rose from 19.5 in February to 20.2 in March. This represents a major turnaround from six months ago, in which manufacturers in the region were largely in contraction.
Many of the subcomponents of the index, though, were mixed. Measures for new orders and shipments eased slightly while still suggesting expansion for both. On the other hand, delivery times, inventories, employment and the average workweek all improved.
Inflationary pressures rose significantly in March. This was echoed in this morning’s producer price index release from the Bureau of Labor Statistics. The index for the prices paid for raw materials jumped from 25.9 in February to 50.6 in March. Further aggravating these pressures, the ability to pass these costs on to the consumer eased somewhat.
Looking to the next six months, manufacturers remain extremely positive, even with a modest slowing of the forward-looking business conditions index, down to 47.5 from 50.4 for the month. Overall, businesses are optimistic about future orders, shipments, employment and capital expenditures.
Chad Moutray is chief economist, National Association of Manufacturers.