The numbers: The New York Fed’s Empire State business conditions index rose 8.6 points to 12.1 in February, the regional Fed bank said Tuesday. This is the highest level of activity since July. Economists had expected a reading of 5.9, according to a survey by the Wall Street Journal. Any reading above zero indicates improving conditions.
What happened: The new orders index rose 4.2 points to 10.8 in February, while shipments fell 3.3 points to 4. Unfilled orders rose 8.1 points to 2.6 in February.
Prices paid for goods jumped 12.3 points to 57.8 in February. That’s the highest level since 2011. Prices received rose 8.2 points to 23.4.
Manufacturers expectations for business conditions in the next six months rose 3 points to 34.9.
Big picture: The Empire State index gets market attention because it is seen as a leading indicator for the national ISM manufacturing index. In January, the ISM factory index slipped from its highest reading in more than two years to 58.7. That was still the eighth straight month above the 50% break between contraction and expansion and economists think the factory sector is humming along. Price pressures reflect continued growth in demand and some bottlenecks in the supply chain. Economists are watching closely to see if these prices pressures spill over into broader inflation readings.
Market reaction: Futures indicated a higher opening on Wall Street on Tuesday after all three major U.S. stock indexes closed at record highs on Friday. The Dow Jones Industrial Average
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