Economic Report: Inflation components of Philly, Empire manufacturing gauges vault in February

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Senior economics reporter

A worker applies a satin finish to a nickel plated bath fixture inside the Watermark Designs manufacturing facility in Brooklyn, New York

The numbers: Two gauges of manufacturing sentiment showed continued solid growth in February, according to data released Thursday, as both indicates rising price pressures.

The Philadelphia Fed manufacturing index rose to a reading of 25.8 in February from 22.2 in January. Economists had expected a slight retreat to 21.

The Empire State Index, meanwhile slowed to a reading of 13.1 in February from 17.7 in January, the New York Fed said. Economists had expected a reading of 17.5. This is the fourth straight drop after the index hit 28.1 in October.

Both gauges are well above zero indicating improving conditions.

What happened: In Philadelphia, the new-orders gauge jumped to 24.5 from 10.1, signalling faster growth in the future. But the shipments gauge declined to 15.5 from 30.3. The prices paid index increased 12 points to 45, its highest reading since May 2011.

In the New York region, the new-orders index and shipments gauges were little changed. The new-orders index rose 1.6 points to 13.5, and the shipments index slipped 1.9 points to 12.5. The prices paid index jumped 12 points to 48.6, its highest level in nearly six years, the New York Fed said.

Big picture: Analysts were looking for slightly softer or steady readings. The two regional manufacturing surveys had been a bit higher than actual output over the past two months. But overall, manufacturing remains a bright spot for the economy.

What are they saying?: “The factory sector recovery that took hold in 2017 remains firmly in place. The collective 2015-2016 headwinds of weak demand at home and abroad, falling commodity prices and a strong U.S. dollar have been flipped on their heads, with no immediate end in sight,” said John Silvia, chief economist at Wells Fargo.

Market reaction: Stocks were set to open higher Thursday, putting the Dow Industrial Average DJIA, +1.03%  on track for its 5th straight gain after ten days of turbulence.

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