A major indicator of national manufacturing reported a high level of optimism, suggesting the recovery could become a rolling trend. The Empire State Manufacturing Index, which surveys conditions and expectations within the manufacturing industries of New York, New Jersey and Connecticut, had a headline reading of 19.5 Wednesday, far above expectations.
Economists surveyed by Bloomberg had expected a reading of only 15, with no estimate exceeding 18. Any reading over 0 reflects positive momentum. The index is compiled monthly by the Federal Reserve Bank of New York.
Overall, this report continues the recent positive trend across both national and regional manufacturing surveys and shows that manufacturing activity is off to a solid start to 2012, Cooper Howes, an economist with Barclays Capital, said in a note.
The index was boosted by rosy expectations about the future, even as some data marking current conditions were less optimistic than January's report. There were large increases in sub-indexes for expected capital expenditures and expected prices paid. However, both the current employment and new orders sub-indexes fell.
The Empire State Index is not the first to report increased economic optimism.. A recent reading of U.S. consumer confidence showed shoppers are optimistic about where the economy will be in six months but, having driven up retail sales during the holiday season, are sticking to budgets now.
It also agrees with previous manufacturing indicators: economists have seen better-than-expected improvements in manufacturing over the past two months driving a tepid U.S. economic recovery.