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Last updateThu, 23 Mar 2017 7pm

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Consumer Sentiment Reaches Highest Level Since 2000

The overall level of consumer sentiment remained quite favorable in early March due to renewed strength in current economic conditions as well as the extraordinary influence of partisanship on economic prospects. The current economic conditions component reached its highest level since 2000, largely due to improved personal finances.

Overall, the University of Michigan’s Consumer Sentiment Index reports, the sentiment data has been characterized by rising optimism as well as by rising uncertainty due to a partisan divide. Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders. This combination will result in uneven spending gains over time and across products. 


U.S. Manufacturing Output Rose 0.5% in February

Industrial production was unchanged in February following a 0.1% decrease in January. In February, manufacturing output moved up 0.5% for its sixth consecutive monthly increase. Led by advances of more than 1% for nonmetallic mineral products, fabricated metal products, and machinery, the production of durables increased 0.6%. Mining output jumped 2.7%, but the index for utilities fell 5.7%, as continued unseasonably warm weather further reduced demand for heating. At 104.7% of its 2012 average, total industrial production in February was 0.3% above its level of a year earlier. 

Philly Fed Manufacturing Index Rises More Than Expected

Results from the Philadelphia Federal Reserve’s March Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand. The diffusion index for general activity fell from its high reading in February, but the survey’s other broad indicators for new orders, shipments, and employment all improved or were steady this month. Price pressures also picked up, according to reporting firms. The survey’s future indicators continued to improve and reflect a broadening base of optimism about future growth in manufacturing. 

Manufacturing in New York State Expands in March

Business activity continued to grow at a solid clip in New York State, according to firms responding to the March 2017 Empire State Manufacturing Survey. The headline general business conditions index edged down two points to 16.4. The new orders index climbed to 21.3, its highest level in several years, pointing to a substantial increase in orders. The shipments index moved down to 11.3, indicating that shipments increased at a slower pace. The unfilled orders index rose to 14.2, its highest level in more than a decade, and delivery times lengthened. Labor market conditions pointed to an increase in both employment and hours worked. Input prices and selling prices increased at a slower pace this month. Indexes assessing the six-month outlook, although generally somewhat lower, continued to convey a high degree of optimism about future conditions. 

Fed Raising Interest Rates After Positive Signs from U.S. Economy

Information received since the Federal Reserve’s Federal Open Market Committee (FOMC) met in February indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace.

In view of realized and expected labor market conditions and inflation, the FOMC decided to raise the target range for the federal funds rate to 3/4 to 1%. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2% inflation. 

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