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Philly Fed Index Indicates Slower Growth In November

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Philadelphia-area manufacturing activity has seen continued growth in the month of November, the Federal Reserve Bank of Philadelphia revealed in a report on Thursday, although the pace of growth slowed compared to the previous month.

The report said the Philly Fed Index pulled back to 26.3 in November after spiking to 32.3 in October, but a positive reading still indicates growth in regional manufacturing activity. Economists had expected the index to drop to 22.0.

The pullback by the headline index came as the new orders index slumped to 37.9 in November from 42.6 in October and the shipments index plunged to 24.9 from 46.5.

Meanwhile, the number of employees index jumped to 27.2 in November from 12.7 in October, indicating a notable acceleration in the pace of job growth.

The report said the prices paid index also surged up to 38.9 in November from 28.5 in October, while the prices received index spiked to 25.4 from 14.0.

Looking ahead, the Philly Fed said most future indexes moderated this month but continue to indicate that firms expect growth over the next six months.

The diffusion index for future general activity tumbled to 44.3 in November after soaring to a four-month high of 62.7 in October.

"Manufacturing staged a fairly solid recovery from the depths of the pandemic crisis, but we're concerned about future activity as the pandemic surges and lawmakers look unlikely to deliver imminent and major fiscal aid," said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

He added, "Weakening demand, a fading fiscal boost, ongoing supply chain issues, and an accelerating pandemic crisis risk hobbling manufacturing's recovery ahead."

On Monday, the New York Fed released a separate report showing New York manufacturing activity unexpectedly expanded at a slower rate in the month of November.

The New York Fed said its general business conditions index fell to 6.3 in November from 10.5 in October. While a positive reading still indicates growth in regional manufacturing activity, economists had expected the index to rise to 13.5.

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