Growth in Philadelphia-area manufacturing activity has accelerated by much more than anticipated in the month of April, according to the results of the Federal Reserve Bank of Philadelphia's Business Outlook Survey released on Thursday.
The Philly Fed said its diffusion index of current activity climbed to 16.6 in April from 9.0 in March, with a positive reading indicating growth in regional manufacturing activity. Economists had been expecting the index to edge up to a reading of 10.0.
With the bigger than expected increase, the diffusion index of current activity reached its highest level since hitting 20.0 last September.
The Philly Fed noted that the index has now increased for two consecutive months following the weather-influenced negative reading in February.
The notable increase by the headline index partly reflected significant accelerations in the pace of growth in new orders and shipments.
The new orders index jumped to 14.8 in April from 5.7 in March, while the shipments index surged up to 22.7 from 5.7 in the previous month.
The report also showed that the number of employees index climbed to 6.9 in April from 1.7 in March, indicating faster job growth in the Philadelphia manufacturing sector.
On the inflation front, the prices paid index dipped to 11.3 in April from 13.9 in March, while the prices received index was unchanged at 4.3.
The Philly Fed said the survey's price diffusion indexes continue to suggest overall moderate rates of price growth.
Looking ahead, the future general activity index dropped to 26.6 in April from 35.4 in March, but the Philly Fed said firms remain optimistic about the growth of overall manufacturing activity for the next six months.
Amna Asaf, an economist at Capital Economics, said, "Overall, the improvement in the Philly Fed survey, even when taken together with the weakness in the Empire State report (released earlier this week), is consistent with another rise in the national ISM manufacturing index."
"Furthermore, echoing what we learnt from yesterday's Beige Book of anecdotal information from the Fed, it suggests that manufacturing activity is pulling out of its weather-induced slump," she added.
The New York Federal Reserve released a separate report on Tuesday showing that business activity for New York manufacturers was roughly flat in the month of April.
The report showed that the New York Fed's general business conditions index dropped to 1.3 in April from 5.6 in March. The drop surprised economists, who had expected the index to climb to 8.0.
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