Manufacturing activity in the Philadelphia area unexpectedly increased in the month of June, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of activity in the sector climbing to a two-year high.
The Philly Fed said its diffusion index of current activity jumped to a positive 12.5 in June from a negative 5.2 in May, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to climb to a negative 1.0.
With the much bigger than expected increase, the Philly Fed index rose to its highest level since hitting 13.7 in April of 2011.
The report said other indicators showed similar improvement, with the new orders index surging up to a positive 16.6 in June from a negative 7.9 in May.
The shipments index also climbed back into positive territory, rising to a positive 4.1 in June from a negative 8.5 in the previous month.
While the number of employees index also rose to a negative 5.4 in June from a negative 8.7 in May, the negative reading points to continued weakness in regional labor market conditions.
On the inflation front, the prices received index jumped to 22.5 in June from 6.9 in May, while the prices received index climbed to a positive 14.6 from a negative 3.3.
The Philly Fed also said the survey's future indicators suggest continued optimism among the reporting manufacturers.
The future activity index edged up to 33.7 in June from 32.3 in May, reaching its highest level since coming at 40.9 in September of 2012.
Monday morning, the New York Federal Reserve released a report showing that conditions for New York manufacturers improved modestly in the month of June.
The New York Fed said its general business conditions index rose to a positive 7.8 in June from a negative 1.4 in May, while economists had expected the index to climb to a positive 0.5.
While the headline index rose by much more than expected, the New York Fed noted that most other indicators in the survey fell for the month.
Peter Boockvar of Morgan Stanley said, "While we have more regional survey's to see, if NY and Philly are an early indication, we may see the national ISM get back above 50 from 49 in May."
For comments and feedback: editorial@rttnews.com