US Manufacturing Index at a 33year high
New-orders index surges; ‘Morning in America?’
The Philadelphia Fed said its manufacturing index soared in February to a 33-year high, in another indication of improving business sentiment in the wake of a Republican election sweep.
The Philadelphia Fed index surged to a reading of 43.3 from 23.6 in January. That’s the highest level since early 1984, on a scale where any reading above zero indicates improving conditions. That is well above the MarketWatch economic consensus was for a reading of 20.
It was also the biggest one-month gain in the index since June 2009.
Manufacturing activity in the Philadelphia region has been improving since the middle of last year.
“It is an exaggeration to suggest that we are on the cusp of Morning in America, but factory managers are clearly feeling very good about their prospects in the wake of the election,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
“Morning in America” was the famous commercial run by President Ronald Reagan during his re-election campaign that discussed the U.S. economic revival. Business sentiment indicators have surged since President Donald Trump’s election victory.
Others were more cautious.
Jim O’Sullivan, chief U.S. economist, said factory owners’ hopes may have been raised a bit too much and “reality could prove disappointing.”
Blerina Uruci, economist at Barclays, noted that industrial production and manufacturing data for January was soft “and have yet to show the business optimism translating into output growth for the sector.”
Mike Trebing, senior economic analyst at the Philadelphia Fed, said the rise in the index suggests growth has been broadening in the region.