The Philadelphia Fed’s barometer of manufacturing activity turned negative, joining the New York Fed and the Richmond Fed in indicating a contraction for the sector.
The Federal Reserve Bank of Philadelphia said Thursday that its index regional business activity fell to negative 3.3 in June from positive 2.6 in May.
Economists were actually expecting an improvement to a reading of 5.5, according to Econoday.
Any result below zero indicates a contraction in the manufacturing sector.
The gauge of new orders crashed 35 points to negative 12.4, suggesting a huge decline in demand. The shipments index plunged 25 points but held on to positive territory at 10.8
The index for future general activity decreased for the fifth consecutive month, to negative 6.8, the first negative reading since December 2008.
The future new orders index dropped 24 points to a negative 7.4. The future shipments index sank 29 points to 3.6.
Inflationary pressures remain very high and there were widespread price increases, although there was some easing from May. Seventy-one percent of manufacturers reported higher input costs and 51.5 reported raising prices on future products. Sixty-one point eight percent expect higher input prices six months from now and 53.7 expect to raise their own prices.
The labor market indicators signal ongoing tightness. The employment index rose from 25.5 to 28.1, with 31.3 percent of companies saying they added employees. The expectations index for employment moved down from 29.2 to 10.5, with 20.6 percent expecting to grow payrolls, 67.9 expecting no change, and 10.5 expecting to reduce headcount.
The Richmond Fed and New York Fed index fell into negative territory in May. On Wednesday, the New York Fed reported that its index had improved but remained negative, defying predictions that it would bounce back to expansion. The June read from the Richmond Fed will be issued on June 28th.
The Kansas City Fed and Dallas Fed both still indicated expansion in May, with the Dallas Fed survey showing that the expansion accelerated. Both regional Fed banks cover areas with high levels of exposure to the energy sector.
The survey covers manufacturing firms in the Third Federal Reserve District, which includes eastern Pennsylvania, southern New Jersey, and Delaware.
COMMENTS
Please let us know if you're having issues with commenting.