Manufacturers in the Philadelphia region have seen a continued decline in activity in the month of February, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.
The Philly Fed said its index of current activity fell to a negative 12.5 in February from a negative 5.8 in January, with a negative reading indicating a contraction in regional manufacturing activity.
The drop by the Philly Fed index came as a surprise to economists, who had been expecting the index to climb to a positive 1.1.
With the unexpected decrease, the Philly Fed Index fell to its lowest level since hitting a negative 12.8 in June of 2012.
Reflecting a drop in demand for manufactured goods, the new orders index fell to a negative 7.8 in February from a negative 4.3 in January.
The unfilled orders index also tumbled to a negative 11.2 from a negative 1.0, while the inventories index fell to a negative 10.0 from a negative 6.5.
On the other hand, the shipments index climbed to 2.4 in February from 0.4 in January, indicating a slightly faster rate of growth.
The report also showed a notable turnaround by employment, as the number of employees index jumped to a positive 0.9 in February from a negative 5.2 in January.
With regard to inflation, the prices received index edged up to a negative 0.5 in February from a negative 1.1 in January, while the prices paid index fell to 8.9 from 14.7.
Amna Asaf, an economists at Capital Economics, said, "Overall, the Philly Fed is a reminder that the US manufacturing sector remains weak and any recovery this year is likely to be modest, particularly if the euro-zone crisis flares up again."
Last week, the New York Federal Reserve released a separate report showing that conditions for New York manufacturers improved for the first time since the summer in the month of February
The New York Fed said its general business conditions index jumped to a positive 10.0 in February from a negative 7.8 in January, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to climb to a negative 1.8.
With the much bigger than expected increase, the general business conditions index turned positive for the first time since July of 2012.
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