The first economic release of the week was strong, yet unlikely to be sufficiently strong to contend with growing tension reported from Iraq over the weekend. Manufacturing activity accelerated in the tri-state area in June according to the New York Federal Reserve with its business index bucking consensus by rising to 19.28 and its highest level since June 2010. The advance was helped by surging new orders, where the component index also advanced to its strongest since June 2010.
Ahead of its release, forecasters predicted that the index would soften from its May reading of 19.01 to 15.00. The New York Fed noted that labor conditions continued to improve and showed “modest increase in employment levels and hours worked.” Overall business conditions advanced with 40% of respondents reporting improved conditions on the prior month.
However, the shipments index fell three points to 14.2 yet continued to point to “significant expansion” according to the regional Fed.
There was also encouraging news on the inflation front where the pace of price increases eased on both measures. The prices paid index fell three points to 17.2 while prices received fell by two points to 4.3. The rosy report also included still strong optimism for the six-month outlook where, despite a softening in the overall business conditions index, both forward gauges for new orders and shipments advanced strongly.
Overall activity and new orders highest since in four years