After reporting growth in regional manufacturing activity in the previous month, the Federal Reserve Bank of Philadelphia released a report on Thursday showing a significant downturn in activity in the month of September.
The Philly Fed said its diffusion index for current activity tumbled to a negative 13.5 in September from a positive 12.0 in August, with a negative reading indicating contraction. Economists had expected the index to slump to a negative 0.7.
The sharp pullback by the headline index came as the indicators for new orders and shipments also returned to negative territory after turning positive in August.
The new orders index plunged to a negative 10.2 in September from a positive 16.0 in August, while the shipments index slid to a negative 3.2 in September from a positive 5.7 in August.
Meanwhile, the number of employees index crept up to a negative 5.7 in September from a negative 6.0 in August, although the negative reading still indicates a decrease in employment.
The report also said the prices paid index climbed to 25.7 in September from 20.8 in August, while the prices received index inched up to 14.8 in September from 14.1 in August.
Looking ahead, the diffusion index for future general activity jumped to 11.1 in September from 3.9 percent in August, suggesting more widespread expectations for overall growth over the next six months.
A separate report released by the Federal Reserve Bank of New York last Friday showed a substantial turnaround by New York manufacturing activity in the month of September.
The New York Fed said its general business conditions index surged to a positive 1.9 in September from a negative 19.0 in August, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to climb to a negative 10.0.
