The numbers: The New York Fed’s Empire State business conditions index inched higher to 3.1 in February, after a surprise negative 0.7 reading in the prior month, the regional Fed bank said Tuesday. Economists had expected a stronger rebound to a reading of 10, according to a survey by The Wall Street Journal.
Any reading above zero indicates improving conditions.
Key details: Optimism waned among manufacturers in New York in February as the prices-received index hit a record high.
The index for future business conditions, a measure of optimism, dropped 7 points to 28.2, its lowest level since the early stages of the pandemic.
The prices received index rose a steep 17 points to a record high of 54.1 in February, signaling ongoing substantial increases in both input prices and selling prices.
The new-orders index recovered into positive territory, rising 6.4 points to 1.4 in February, and the shipments index rose 1.9 points to 2.9.
Unfilled orders rose 2.3 points to 14.4 in February while delivery times were unchanged at 21.6.
In one bright spot, the index of the number of employees rose 7 points to 23.1 in February.
Big picture: The decline in optimism will be troubling for economists. The index’s surprise plunge by 32.6 points in January has been blamed on the omicron variant but now perhaps more persistent negative forces are at work.
The Empire State manufacturing index is seen as a good early read on the health of the manufacturing sector. In January, the national ISM factory index fell for the third straight month to a 14-month low reading of 57.6, still well above the 50 reading that marks expansion from contraction.