Philly Fed Index Drops For Third Straight Month But Still Indicates Growth

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Growth in Philadelphia-area manufacturing activity slowed modestly in the month of September, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.

The Philly Fed said its diffusion index for current activity slipped to 15.0 in September after dropping to 17.2 in August, although a positive reading still indicates growth in regional manufacturing. The dip by the index matched economist estimates.

The headline index fell for the third consecutive month despite a faster rate of growth in new orders and a significant acceleration in the pace of growth in shipments.

The report said the new orders index jumped to 25.5 in September from 19.0 in August, while the shipments index spiked to 36.6 from 9.4.

The number of employees index also surged up to 15.7 in September from 9.0 in August, indicating a faster rate of job growth.

The prices paid index also shot up to 25.1 in September from 15.3 in August, while the prices received index climbed to 18.4 from 12.4.

Looking ahead, the Philly Fed said nearly all of the future indexes increased, suggesting more widespread optimism among firms about growth over the next six months.

The report said the diffusion index for future general activity spiked to 56.6 in September after edging up to 38.8 in August.

“The third consecutive monthly decline of the Philly Fed manufacturing index in September signals regional activity is falling in line with the slower pace of underlying economic expansion,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, “Encouragingly, manufacturers are maintaining their near-term optimism and envision the need to increase activity and hiring ahead.”

On Tuesday, New York Fed released a separate report showing a significant acceleration in the pace of growth in regional manufacturing activity in the month of September.

The New York Fed said its general business conditions index jumped to 17.0 in September from 3.7 in August. Economists had expected the index to rise to 6.0.


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