Surge in capital expenditures intentions index an encouraging element of Empire State survey: Capital Economics

Quotes from Capital Economics:

- The modest decline in the Empire State manufacturing index to 7.8 in February, from 10.0, leaves it at a level that historically has been consistent with GDP growth of around 2% annualised. Since manufacturing is the sector most exposed to the stronger dollar and the weakness of overseas demand, however, this doesn't change our view that actual GDP growth will be nearer 3% this year.

- Looking at the details, new orders slipped to 1.2, from 6.1, but shipments increased to 14.1, from 9.6. The employment index slipped, from 13.7 to 10.1, but the latter is still a relatively strong reading. 

- Finally, perhaps the most encouraging element of the survey was the surge in the capital expenditures intentions index to 32.6, from 14.7. That points to a rebound in investment in equipment this quarter although, given that stronger dollar, it may be that manufacturers are eyeing cheaper imported machines.