New York Manufacturing Index Unexpectedly Reaches Four-Year High

(RTTNews) - Business conditions for New York manufacturers improved significantly for the second consecutive month in June, the Federal Reserve Bank of New York said in a report released on Monday.

The New York Fed said its general business conditions index inched up to 19.3 in June from 19.0 in May, with a positive reading indicating growth in regional manufacturing activity.

The modest uptick came as a surprise to economists, who had been expecting the index to drop to a reading of 15.0.

With the unexpected increase, the general business conditions index rose to its highest level since reaching 20.7 in June of 2010.

Peter Boockvar, managing director at the Lindsey Group, said, "While its only the first of many regional manufacturing surveys, it was encouraging to see the NY index hold at its best level since June '10 as the 18 point jump in May has held for now.

"There is no question the economy in Q2 is on better ground than the easy comparison of Q1 but that is of course well known, thus leaving the pace of the 2nd half of 2014 as the center of debate," he added.

A notable acceleration by the pace of growth in new orders contributed to the continued strength in the sector, with the new orders index jumping to a four-year high of 18.4 in June from 10.4 in May.

On the other hand, the shipments index dipped to 14.2 in June from 17.4 in May, indicating a slowdown in the pace of growth.

The number of employees index also fell to 10.8 in June from 20.9 in the previous month, although the positive reading still indicated the sixth consecutive month of job growth.

The prices paid index also slipped to 17.2 in June from 19.8 in May, while the prices received index edged down to 4.3 from 6.6.

Looking ahead, the New York Fed said the indexes for the six-month outlook conveyed a strong degree of optimism about future business conditions.

While the index for future general business conditions fell to 39.8 in June from 44.0 in May, the index remained at an elevated level after reaching a two-year high in the previous month.

Thursday morning, the Philadelphia Federal Reserve is scheduled to release its report on regional manufacturing activity. The Philly Fed Index is expected to dip to 13.0 in June from 15.4 in May.