Strong Rebound For Regional Manufacturing Surveys

The Empire State and Philadelphia Fed regional manufacturing surveys surprised to the upside, pointing to more stable activity in February vs poor January readings.

The Empire State manufacturing survey rebounded strongly to -2.4 from January's -43.7, and exceeded the consensus estimate of -12.5.

• While the series is clearly volatile, the subcategories of February's report showed much less negative activity than January's. New orders rose 43.1 points to -6.3 ("pointing to an ongoing decline in orders, though at a slower pace than last month"), while shipments jumped by 34.1 points to 2.8. "The six-month outlook improved, though optimism remained subdued".

The Philadelphia Fed Business Outlook indicator rose by 15.8pts to +5.2 in February, the highest since August 2023 and 2nd highest monthly reading since April 2022, and above an expected -8.1.

• New orders improved to -5.2 from -17.9 and shipments to 10.7 from -6.2, with the 6 month forecast of new orders jumping to 24.2 (highest since July 2023) from 9.7 (lowest since May 2023). 6-month capital expenditure expectations rose to the highest since December 2022 (12.70).
• Though the number of employees pulled back to -10.3 from -1.8, and prices paid rose to 16.6 from 11.3 (prices received were basically flat, down 0.1pp to 6.2).
• In response to a special question, firms noted that "regarding their own prices over the next year, the firms’ median forecast was for an expected increase of 3.0 percent, unchanged from when this question was last asked in November."