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Philly Fed Index Turns Negative For First Time Since 2016

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Philadelphia-area manufacturing activity contracted for the first time since May of 2016, the Federal Reserve Bank of Philadelphia revealed in a report released on Thursday.

The Philly Fed said its index for current manufacturing activity in the region tumbled to a negative 4.1 in February from a positive 17.0 in January, with a negative reading indicating contraction. The index had been expected to slip to 14.0.

The much steeper than expected drop by the headline index came amid contractions in both new orders and shipments.

The new orders index plunged to a negative 2.4 in February from a positive 21.3 in January, while the shipments index slumped to a negative 5.3 from a positive 11.4.

On the other hand, the report said the number of employees index jumped to 14.5 in February from 9.6 in February, indicating a faster rate of job growth.

The prices received index also rose to 27.7 in February from 24.8 in January, although the prices paid index slid to 21.8 from 32.7.

Looking ahead, the Philly Fed said the survey's future indexes indicate respondents continue to expect growth over the next six months, with the index for future general activity inching up to 31.3 in February from 31.2 in January.

A separate report released by the New York Fed last Friday showed a notable rebound in the pace of growth in regional manufacturing activity in the month of February.

The New York Fed said its general business conditions index climbed to 8.8 in February from 3.9 in January, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to rise to 7.0.

The bigger than expected increase by the index came after it tumbled to its lowest level in well over a year in the previous month.

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