A key measure of manufacturing activity in the Philadelphia region surged unexpectedly in February, fueling optimism about the health of the industrial sector at the start of 2017.
The Philadelphia Federal Reserve Bank manufacturing survey rose to 43.3 in February, following an increase to 23.6 the previous month. That was the highest level since 2011. Analysts in a median estimate forecast a sharp decline to 18.5.
A reading above zero indicates a net share of respondents saw improvements in overall business activity. The index has been in positive territory since last July.
The index for current new orders rose 12 points this month, while the gauge of shipments accelerated eight points. Both delivery times and unfilled orders remained positive for the fourth consecutive month.
Confidence in the factory sector waned on Wednesday after the Federal Reserve reported a surprise drop in industrial output last month. Industrial production, a broad measure of factory output that includes manufacturers, miners and utilities providers, slipped 0.3% from December. However, a closer look at the numbers showed that utilities was the lone contributor to the decline, as output in manufacturing and mining rose 0.2% and 2.8%, respectively.
America’s manufacturing sector, which accounts for roughly 12% GDP, has been hit hard by globalization. President Donald Trump has vowed to bring manufacturing back to American soil by negotiating shrewd trade deals with low-cost producers. After coming to power, the President wasted little time issuing executive orders withdrawing the United States from the Trans-Pacific Partnership (TPP) and vowing to renegotiate the North American Free Trade Agreement (NAFTA), which has governed trade between the U.S., Canada and Mexico since 1994.