After reporting a slight decrease in regional manufacturing activity in the previous month, the Federal Reserve Bank of New York released a report on Tuesday showing a modest increase in activity in the month of February.
The New York Fed said its general business conditions index rose to a positive 3.1 in February from a negative 0.7 in January.
While a positive reading indicates growth in regional manufacturing activity, however, economists had expected the index to show a more significant rebound to a positive 12.2.
The modest rebound by the headline index partly reflected a turnaround by new orders, with the new orders index climbing to a positive 1.4 in February from a negative 5.0 in January.
The shipments index also rose to 2.9 in February from 1.0 percent in January, while the number of employees index jumped to 23.1 from 16.1.
On the inflation front, the prices paid index edged down to 76.6 in January from 76.7 in December, but the prices received index surged up to 54.1 from 37.1.
The report also showed the unfilled orders index rose to 14.4 in February from 12.1 in January, while the delivery time index held at 21.6.
Looking ahead, the New York Fed said firms were generally optimistic about the six-month outlook, although optimism waned from the previous month.
The index for future business conditions slumped to 28.2 in February from 35.1 in January, hitting the lowest level since the early stages of the coronavirus pandemic.
The New York Fed said longer delivery times, higher prices, and increases in employment are all expected in the months ahead.
“While Omicron’s threat has faded and the economy is learning to live with Covid, it will take time for manufacturers to clear the backlogs and for operating conditions to normalize,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.
On Thursday, the Philadelphia Federal Reserve is scheduled to release its report on regional manufacturing activity in January. The Philly Fed Index is expected to dip to 20.0 in January from 23.2 in February.
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