Philadelphia-area manufacturing firms have continued to report weak business conditions in the month of August, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.
The Philly Fed said its diffusion index of current activity rose to a negative 7.1 in August from a negative 12.9 in July, although a negative reading continues to indicate a contraction in regional manufacturing activity. Economists had expected the index to climb to a negative 5.0.
Despite the increase compared to the previous month, the Philly Fed Index remained in negative territory for the fourth consecutive month.
While the new orders index climbed to a negative 5.5 in August from a negative 6.9 in July, the shipments index fell to a negative 11.3 from a negative 8.6.
The number of employees index also edged down to a negative 8.6 in August from a negative 8.4 in July, indicating a slight acceleration in the decline in employment at Philadelphia-area manufacturing firms.
On the other hand, the prices paid index jumped to 11.2 in August from 3.7 in July and the prices received index crept up to 2.8 from 1.6.
The Philly Fed noted that 26 percent of Philadelphia-area manufacturing firms reported higher input prices in August.
Looking ahead, the report showed that the future general activity index tumbled to 12.5 in August from 19.3 in July but remained positive.
The Philly Fed said most of the future indicators deteriorated from their readings in July but still suggest that firms are expecting growth over the next six months.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, after contractions seen in the national ISM manufacturing reports in June and July, we may be heading for another one in August if the NY and Philly regions are any indication for the other regional reports to be seen in the next few weeks."
Wednesday morning, the New York Federal Reserve released a report showing an unexpected contraction in regional manufacturing activity.
The New York Fed said its general business conditions index dropped to a negative 5.9 in August from a positive 7.4 in July. Economists had expected the index to show a much more modest decrease to 7.0.
by RTT Staff Writer
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