by Calculated Risk on 2/17/2011 10:00:00 AM

From the Philly Fed: February 2011 Business Outlook Survey

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from 19.3 in January to 35.9 this month. This is the highest reading since January 2004. [anything above 0 shows expansion]
...
Although the new orders index was virtually unchanged in February, it has increased over the past six months
...
The current employment index increased 6 points [to 23.6], and for the sixth consecutive month, the percentage of firms reporting an increase in employment (29 percent) is higher than the percentage reporting a decline (5 percent).

That is mostly good news. This was well above the consensus of 21.0.
The concern is the pickup in both prices paid and received:

Price increases for inputs as well as firms’ own manufactured goods were more widespread again this month. Sixty-seven percent of the firms reported higher prices for inputs, compared with 54 percent in the previous month. The prices paid index, which increased 13 points in February, has now increased 55 points over the past five months. On balance, firms also reported a rise in prices for their own manufactured goods.

Click on graph for larger image in new window.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through February. The ISM and total Fed surveys are through January.

This early reading suggests the ISM index will be in the 60s again this month.