NY Manufacturing Activity Grows Rapidly

The New York Federal Reserve reports that manufacturing in New York is growing very quickly. That's great news. This indicates that companies are either ramping up production or planning to do so soon. Some employment growth in manufacturing should follow.

Here's the news blurb, via BusinessWeek/Bloomberg:

The Federal Reserve Bank of New York's general economic index rose to 24.9 this month, higher than anticipated, from 15.9 in January. Readings above zero in the so-called Empire State Index signal growth in the area covering New York and parts of New Jersey and Connecticut.

That's the fastest pace of growth in four months. This is in response to anticipated demand, as well as stronger exports and better consumer spending. And here's some more very promising data:

The New York Fed's gauge of employment increased to 5.6 in February from 4 last month. Measures of the six-month outlook for new orders and shipments increased. The gauge of orders rose to 55.6, the highest since February 2006, from 52. A measure of sales also increased to 55.6, the highest since January 2006.

The inventory index rose to zero from minus 17.3, showing companies have stopped drawing down stockpiles. February marked the first month since August 2008 that companies weren't depleting inventories.

That last paragraph above is particularly noteworthy. It appears to indicate that manufacturing firms no longer have excess inventories. That means any further demand can only be satisfied through more production. And to make that happen, they'll need to ramp up hiring.

This is just a regional report, but it's hard to imagine that the New York area's manufacturing experience would be vastly different from what firms are seeing in the rest of the U.S. Even if the New York area does, for some reason, lead the rest of the nation in a manufacturing rebound's timing, then this news is still good: it indicates that manufacturing growth -- and eventually hiring -- in other regions should soon follow.