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Philly Fed Index Indicates Notably Slower Growth In April


While a report released by the Federal Reserve Bank of Philadelphia on Thursday showed a modest expansion in regional manufacturing activity in the month of April, the index of activity in the sector fell by much more than economists had been anticipating.

The Philly Fed said its diffusion index of current activity fell to 8.5 in April from 12.5 in March, although a positive reading still indicates an increase in manufacturing activity. Economists had expected the index to edge down to a reading of 12.0.

The slowdown in the pace of growth in the sector was partly due to a deceleration in the pace of new orders growth, with the new orders index slipping to 2.7 in April from 3.3 in March.

The shipments index also dropped to 2.8 in April from 3.5 in March, indicating a modest slowdown in the pace of shipment growth.

On the other hand, the number of employees index jumped to 17.9 in April from 6.8 in March, suggesting a faster rate of job growth in the Philadelphia-area manufacturing sector. With the increase, the index rose to its highest level in eleven months.

The inventories index also showed a significant increase during the month, climbing to 8.2 in April from 0.9 in March.

With regard to inflation, the prices paid index rose to 22.5 in April from 18.7 in March, while the prices received index edged up to 9.4 from 8.4.

The Philly Fed also said its future general activity index inched up to 33.8 in April from 32.9 in March, pointing to an improvement in the outlook for activity over the next six months.

On Monday, the New York Federal Reserve released a separate report showing that its index of regional manufacturing activity also fell by more than economists had been expecting.

The New York Fed said its general business conditions index plunged to 6.6 in April from 20.2 in March, while economists had expected the index to edge down to 18.0.

Paul Dales, Senior U.S. Economist at Capital Economics, sad, "When taken together, the two surveys suggest that the industrial recovery is coming off the boil, but nothing more."

On May 1st, the Institute for Supply Management is scheduled to release its report on national manufacturing activity in the month of April. The ISM's index of activity in the manufacturing sector climbed to 53.4 in March from 52.4 in February.

by RTTNews Staff Writer

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