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Philly Fed Survey: New Order Growth Stalled

July 20, 2017

Bottom Line: Manufacturing activity of mid-Atlantic based businesses expanded less than expected as new order growth decelerated sharply. The new order index fell from nearly 26 to 2, pushing the headline into negative territory on an ISM-weighted basis. Together with the Empire Manufacturing survey earlier this week, these early regional manufacturing surveys suggest manufacturing growth decelerated in July with the potential for the national ISM index to be below expectations (currently 56 vs. nearly 58 in the prior month).

The Philadelphia Fed Index FELL by 8.1 points in July to 19.5%, compared with market expectations for 23.0%. This indicates that manufacturing activity in the mid-Atlantic region still expanded in the last month. On an ISM-weighted basis, the index FELL sharply, indicating that the details were even weaker than the headline figure.

New Orders expanded but growth decelerated modestly. Shipments expanded but growth also decelerated sharply. Unfilled Orders decelerated sharply while Inventories climbed.

Employment increased sharply. This portends better factory job creation in the upcoming July payroll employment report.

Prices Paid decelerated moderately.

The 6-Month Outlook Index improved.

Article by Contingent Macro Advisors