Manufacturing activity in the New York region improved this month after last month's sharp decline into contractionary territory, according to the latest figures released by the Federal Reserve Bank of New York.

The regional central bank announced on Tuesday that its Empire State Manufacturing Survey stood at 5.70 in February, after registering a result of -12.60 in January. The data was better than expected, as consensus forecasts pointed to a smaller improvement of -1.0.

“Business activity increased slightly in New York State in February,” the report notes. “New orders and shipments grew moderately. Delivery times were slightly longer and supply availability was slightly lower. Inventories continued to expand modestly. Employment levels declined. Input prices rose at the fastest pace in nearly two years, and sales price increases also rose notably. Although businesses expect conditions to improve over the next six months, optimism about the outlook declined significantly.” 

Gold prices hit new session highs shortly after the 8:30 a.m. EST release. Spot gold last traded at $2,918.83 an ounce, up 0.70% on the session.

The report's components showed strengthening conditions in most areas of the region's manufacturing sector.

“The new orders index rose twenty points to 11.4, suggesting that orders increased after declining last month, and the shipments index rose sixteen points to 14.2, indicating that shipments increased,” the report noted. ”Backlogs remained stable. The inventory index remained positive at 8.7, a sign that inventories grew. The delivery times index reached 5.4, suggesting that delivery times were slightly longer, and the supply availability index fell to -2.2, a sign that supply availability declined slightly.”

“The number of employees index fell to -3.6, suggesting that employment levels declined slightly, while the average workweek index was -1.2, suggesting that hours worked remained stable,” they added.

However, both price indices rose for the second consecutive month. “The prices paid index rose eleven points to 40.2, its highest level in almost two years, and the prices received index rose ten points to 19.6,” the report notes.

And although companies expect conditions to improve in the coming months, optimism declined significantly. “The future business activity index fell fifteen points to 22.2,” the report notes. “Capital spending plans remained weak. Supply availability is expected to contract slightly over the next six months.”

Ernesto Hoffman, Kitco