The Empire State Manufacturing Survey said that manufacturing activity expanded at the fastest pace since September 2014, rising for the fourth straight month in February. The composite index of general business conditions jumped from 6.5 in January to 18.7 in February, with nearly one-third reporting a better environment today than last month. There were also notable improvements in new orders (up from 3.1 to 13.5) and shipments (up from 7.3 to 18.2). Indeed, the percentage of respondents saying that their sales were higher rose from 29.1 percent to 36.3 percent in this survey.
While other measures had made progress in recent months, employment had lagged behind. In this release, however, that started to change. Indices for the number of employees (up from -1.7 to 2.0) and the average workweek (up from -4.2 to 4.1) each shifted into positive territory, with hiring expanding for the first time since May 2016. Hopefully, we will continue seeing stronger labor market data in the coming months, particularly if demand remains strong.
Along those lines, manufacturers in the New York region were very upbeat about the next six months. The forward-looking composite index decreased from 49.7 in January, its highest level in five years, to 41.7 in February, but it remains quite elevated. In fact, more than half of those completing the survey anticipate stronger growth for new orders and shipments in the months ahead, with 35.7 percent and 28.6 percent expecting increased hiring and capital spending, respectively. Some of these measures reflected some easing in February from the robust gains seen in January, but that does not take away from the larger positive trend.