The U.S. manufacturing sector appears to be regaining its footing, suggesting the beaten-down sector may once again be expanding.
The Federal Reserve Bank of Philadelphia’s survey-based index of manufacturing activity soared to 17 in January, up from the weak 0.3 reading in December and well-above forecasts for a reading of 3.0.
That followed a better than expected reading from the New York Fed’s Empire State index, which rose to 4.8 from 3.5. Economists had forecast it remaining close to unchanged.
Taken together, the surveys suggest that manufacturing may be recovering from the doldrums that set in this summer.
The gauges tracking capital expenditures, hiring, and new orders all improved from the prior month. The expectations for the future hit the highest level since 2018.
“Over 62 percent of the firms anticipate increasing production in the first quarter,” the Philly Fed said. “Among the firms expecting an increase in production, 25 percent indicated that this would be accomplished with additional workers. But most indicated higher production would be accomplished without additional hiring: Thirty-three percent would increase the hours of existing workers, while 36 percent indicated production could be increased with higher productivity of existing workers.”