Philadelphia Fed Manufacturing Index Tumbles

Written by Sandy Williams

The current activity index of the Philadelphia Manufacturing Business Outlook Survey dropped 18 points to register 6.3 in January, widely missing economic estimates of 18.7 for the month. The decrease indicates slower growth and was accompanied by a drop in new orders and shipments. The shipments index registered a negative reading, falling 22 points to -6.9. Any reading over zero indicates expansion.

More firms reported a decrease in employee levels than increase in January. The employment level index fell 10 points to -2.0

Less input price pressure was reported by manufacturers last month. The prices paid index fell five points in January for a total of 15 points so far in the past three months. Survey respondents reported “continued moderation in price pressures, attributable to lower energy costs.” Overall, lower energy costs were providing a positive benefit for Philadelphia manufacturers.

The prices received index was at its lowest reading in 21 months, falling 20 points to -0.2. Eighty-four percent of manufacturers, however, reported no change in prices for manufactured goods.

The six month outlook indicated unchanged growth in the manufacturing sector. Future new orders are expected to remain the same. More than 52 percent of respondents said they are not expecting employment levels to change but a higher percentage this month (33 percent) said levels were likely to increase.

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