New York state's manufacturing sector expanded at its quickest pace since the end of 2021 in August, fueled by robust order growth and a strong backlog of pending work. Data released on Monday showed the Federal Reserve Bank of New York's headline business conditions index for manufacturers climbed 5 points to 20.6 during the month. A reading above zero signals expansion in the sector, and the latest figure comfortably outpaced the median estimate of 10 forecast by economists surveyed prior to the release.

The index tracking expectations for overall business conditions over the next six months also moved higher, with the gauge for new orders reaching its strongest level since 2022. Momentum across U.S. manufacturing has built throughout the year, underpinned by resilient consumer demand and steady corporate investment, particularly in areas tied to artificial intelligence infrastructure. Even so, businesses continue to grapple with elevated raw material costs stemming from the conflict in Iran, alongside uncertainty over how long that disruption might persist.

A measure of unfilled orders jumped 10.5 points to 15.5, the highest reading since April 2022. Meanwhile, the index for prices paid for raw materials rose for the first time since May, while the gauge tracking prices received moved lower. Survey responses were collected between August 3 and August 10.