Philly Fed Index Unexpectedly Indicates Faster Growth In March

ism manufacturing 113018 17mar22 lt

A report released by the Federal Reserve Bank of Philadelphia on Thursday showed an unexpected acceleration in the pace of growth in regional manufacturing activity in the month of March.

The Philly Fed said its diffusion index for current activity jumped to 27.4 in March from 16.0 in February, with a positive reading indicating growth in regional manufacturing activity. The increase surprised economists, who had expected the index to edge down to 15.0.

The unexpected surge by the headline index came as the new orders index shot up to 25.8 in March from 14.2 in February, while the shipments index soared to 30.2 in March from 13.4 in February.

The number of employees index also climbed to 38.9 in March from 32.2 in February, indicating an acceleration in the pace of job growth.

Meanwhile, the report showed the delivery times index spiked to 39.7 in March from 23.0 in February, while the unfilled orders index advanced to 39.7 in March from 23.0.

The prices paid index also jumped to 81.0 in March from 69.3 in February, and the prices received index rose to 54.4 in March from 49.8 in February.

Looking ahead, firms remained generally optimistic about growth over the next six months, although the diffusion index for future general activity fell to 22.7 in March from 28.1 in February.

"We believe manufacturing activity won't fall into an outright contraction, but high commodity prices and greater logjams spurred by Covid lockdowns in China and the war in Ukraine will make it harder for US factories to meet demand," said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

He added, "The domestic rotation towards greater spending on in-person services will alleviate some of the pressures on factories, but goods demand will remain healthy."

On Tuesday, the New York Fed released a separate report showing New York manufacturing activity unexpectedly contracted in the month of March.

The New York Fed said its general business conditions index tumbled to a negative 11.8 in March from a positive 3.1 in February, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to dip to a positive 7.0.

With the much bigger than expected decrease, the general business conditions index dropped to its lowest level since May 2020.

For comments and feedback contact: editorial@rttnews.com

Economic News

What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.

Follow RTT