Manufacturing activity in the New York region gave up most of the strong gains made during the prior month although it remained in positive territory, according to data released Tuesday.
The report fits a picture of a manufacturing sector struggling with severe winter weather.
The Empire State index slipped to 4.5 in February after soaring to 12.5 in January, which was the highest level since May 2012, according to the manufacturing survey released by the New York Federal Reserve.
The retreat was bigger than expected. Economists surveyed by MarketWatch had expected the index to only weaken slightly to 9.0. See MarketWatch economic calendar.
The Empire Sate is often the first of a host of regional manufacturing sentiment gauges to be released. It can be volatile from month to month but its timeliness makes it a fairly closely followed indicator.
Stock futures fell after the Empire State report was released, while Treasury prices gained, moving yields lower.
Details
Most of the details of the report were soft.
The new orders index dropped to a negative 0.2 in February from a two-year high of 11 in January.
Unfilled orders, another forward-looking component, remained in negative territory.
The shipments index plunged to 2.1 in February from 15.5 in the prior month.
The employment indexes were little changed, indicating a modest increase in employment levels.
Indexes for the outlook in six months continued to convey optimism.
The index for expected general business conditions rose to 39.0 in February from 37.5 in the prior month.
But expected capital expenditures in the next six months fell ten points to 2.5 in February, a multiyear low.
Source: Marketwatch
