Philly Fed Survey Shows Manufacturing Continues to Shrink for 11th Straight Month

Manufacturing activity in the Mid-Atlantic region fell again in July, according to a monthly survey released Thursday by the Federal Reserve Bank of Philadelphia.

The general activity index for the Philly Fed’s manufacturing survey was nearly unchanged at -13.5 following the prior month’s -13.7. This was the 11th consecutive negative reading for the index.

The median estimate in an Econoday survey of economists was for -10.2.

The index for shipments declined and turned negative.  The index for new orders declined 5 points to -15.9, the index’s 14th consecutive negative reading.

Manufacturers reported steady employment rolls, on balance. The employment index ticked down from a reading of -0.4 last month to -1.0 in July. Fourteen percent of firms reported smaller work forces and 13 percent increased employment. Seventy-two percent reported no change. The index tracking the average work week improved from -8.2 to -3.0.

The outlook, however, brightened. The gauge of future activity jumped from a reading of 12.7 in June to 29.1, the highest reading since August of 2021. Nearly 40 percent of manufacturers in the region say they expect an increase in activity over the next six months, up from 33 percent a month ago. Only 11 percent expect a decrease, down from 20 percent.

The future new orders index and the future shipments index both moved significantly higher. On balance, manufacturers said they expect increases in employment.

The barometer of prices paid for materials declined 1 point to 9.5 in July, below its historic average. One-fifth of the firms reported increases in input prices, and 11 percent reported decreases; 68 percent reported no change. On balance, the firms reported said they were increasing the prices they charge for the goods they produce. The current prices received index climbed from a near-zero reading in June to 23.0 in July, the index’s highest reading since January. Nearly 29 percent of the firms reported increases, 6 percent reported decreases, and 63 percent reported no change.

The future price indexes suggest that manufacturers expect price increases over the next six months, but both indexes remained below their long-run averages.