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Philly Fed Index Indicates Slower Growth But Comes In Above Estimates

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Philadelphia-area manufacturing activity saw continued growth in the month of August, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the pace of growth slowing by less than economists had expected.

The Philly Fed said its diffusion index for current general activity dropped to 16.8 in August after surging up to 21.8 in July, although a positive reading still indicates growth in regional manufacturing activity. Economists had expected the index to tumble to 10.0.

The pullback by the headline index was partly due to a slowdown in the pace of shipment growth, with the shipments index slumping to 19.0 in August from 24.9 in July.

The number of employees index also plunged to 3.6 in August from 30.0 in July, indicating a significant slowdown in the pace of job growth.

On the other hand, the report said the new orders index climbed to 25.8 in August from 18.9 in July, helping to limit the downside for the headline index.

The report said the prices received index also rose to 13.0 in August from 9.5 in July, although the prices paid index fell to 12.8 from 16.1.

Looking ahead, the Philly Fed said the survey's future activity indexes remained positive, suggesting continued optimism about growth for the next six months.

The diffusion index for future general activity slid to 32.6 in August from 38.0 in July, although the report said over 46 percent of the firms expect increases in activity over the next six months compared to just 14 percent that expect declines.

A separate report released by the New York Fed on Thursday unexpectedly showed a slight acceleration in the pace of growth in regional manufacturing activity in the month of August.

The New York Fed said its general business conditions index inched up to 4.8 in August after climbing to 4.3 in July, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to dip to 3.0.

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