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Philadelphia Fed Survey: Factory Activity Declines Modestly

July 21, 2016

Bottom Line: Manufacturing activity of mid-Atlantic based businesses contracted modestly, compared to market expectations for a slight gain. While better than last week’s Empire State Manufacturing Survey, 4.6% vs. -1.6% on a ISM weighted basis, it suggests that the early outlook for the national ISM Manufacturing Survey, to be reported on August 1, is mixed.

The Philadelphia Fed Index FELL by 7.6 points in July to -2.9%, compared with market expectations for a small increase to 4.5%. This indicates that manufacturing activity in the mid-Atlantic region contracted modestly. On an ISM-weighted basis, the index increased modestly, indicating that the details were mixed compared to the headline figure.

New Orders increased sharply by 11.8%, their first advance in the past 4 months. Shipments increased by 6.3%, also their first advance in the past 4 months. Unfilled Orders rose modestly for the first time in the last 14 months while Inventories dropped, their 13th consecutive decline. Employment decreased modestly by 1.6% for 7th straight month. This portends softer factory job creation in the upcoming July payroll employment report. Prices Paid decelerated moderately. The 6-Month Outlook improved modestly.

Article by contingentmacro