NEW YORK – Factory activity in the U.S. Mid-Atlantic region recovered strongly in February to the strongest level since the summer as new orders firmed and price pressures moderated, a survey released Thursday showed.
The Philadelphia Federal Reserve Bank said its business activity index jumped to 15.4 in February from a weak 3.3 reading in January, beating Wall Street forecasts for a rise to 9.0. It was the highest reading since August last year.
Any reading above zero indicates growth in the region's manufacturing sector.
"Manufacturing production in the entire country is running flat-out at the moment," said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi.
"This is consistent with the idea that slack resources have been taken up in the economy. There is considerable momentum and this is the sort of environment where inflation pressures can spill over and actually cause an increase in the rate of inflation, so it is a bit early for them (the Fed) to lay down their saber," Rupkey said.
The survey's new orders index, a gauge of future growth, rose to 12.5 in February from 11.1 in January, while the jobs component slipped to 11.3 from 11.7.
A measure of prices paid by manufacturers dropped to 30.5 from 44.9 the month before as energy prices eased.
"Price pressures remain but continue to show a moderating trend," the survey said.
Treasury debt prices hovered near unchanged as investors paid more attention to what new Fed Chairman Ben Bernanke was telling the Senate on the second day of his testimony.
The dollar initially firmed slightly, as the weak prices paid component offset a strong headline reading, one currency trader said. The euro traded at $1.1876 from $1.1880 just before the Philadelphia Fed survey's release.
The new orders index, a gauge of future growth, rose to 12.5 in February from 11.1 in January, while the jobs component slipped to 11.3 from 11.7.
A measure of prices paid by manufacturers dropped to 30.5 from 44.9 the month before as energy prices eased in early February.
"The region's manufacturing executives remain optimistic about future growth in their sector," the survey said, noting that the six-month outlook index remained at strong levels.
The regional survey is one of the first indicators of U.S. manufacturing every month and is often used to gauge the overall state of factories nationwide.