Philadelphia-area manufacturing firms indicated weaker business conditions in the month of June, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of regional manufacturing activity falling further into negative territory.
The Philly Fed said its diffusion index of current activity fell to a negative 16.6 in June from a negative 5.8 in May, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to rebound to a positive 0.5.
With the unexpected decrease, the index of regional manufacturing activity fell to its lowest level since coming in at a negative 22.7 in August of 2011.
An acceleration in the pace of contraction in new orders contributed to the weakness in the sector, with the new orders index falling to a negative 18.8 in June from a negative 1.2 in May.
The report also showed the first contraction in shipments in nine months, as the shipments index tumbled to a negative 16.6 in June from a positive 3.5 in May.
The inventories index also turned negative for the month, while the unfilled orders index fell further into negative territory.
The report also showed that the prices paid index fell to a negative 2.8 in June from a positive 5.0 in May, while the prices received index dropped to a negative 6.9 from a negative 4.5.
On the other hand, the number of employees index crept up to a positive 1.8 percent in June from a negative 1.3 in May, indicating a modest increase in jobs.
The Philly Fed also said that the future general activity index climbed to 19.5 in June from 15.0 in May, pointing to an improvement in the outlook for the sector.
Last Friday, the New York Federal Reserve released a separate report showing only a slight expansion in regional manufacturing activity in the month of June.
The New York Fed said its general business conditions index fell to 2.3 in June from 17.1 in May, although a positive reading still indicates growth. Economists had expected the index to show a much more modest decrease to a reading of 13.8.
With the much steeper than expected drop, the index fell to its lowest level since coming in at 0.8 in November of 2011.
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