In its latest report, the Federal Reserve Bank of Philadelphia announced on Thursday a marked acceleration in regional manufacturing growth for July, exceeding economists' expectations. This comes after a previous report had indicated a slowdown in June.
The Philadelphia Fed's diffusion index for current general activity surged to 13.9 in July from 1.3 in June, signaling growth, contrary to economists' modest forecast of 2.9.
The significant jump in the headline index can largely be attributed to dramatic improvements in new orders and shipments. Specifically, the new orders index soared to 20.7 in July from -2.2 in June, while the shipments index climbed to 27.8 from -7.2 over the same period.
Employment also showed a striking rebound, with the number of employees index increasing to 15.2 in July from -2.5 in June. This positive trend is mirrored in future activity indicators, which have risen, suggesting broad-based expectations for overall growth in the next six months. The future general activity index jumped to 38.7 in July from 13.8 in June, marking its highest point since July 2021.
On the inflation side, the prices paid index slightly decreased to 19.8 in July from 22.5 in June, whereas the prices received index saw a significant jump to 24.2 from 13.7.
In contrast, a separate report from the Federal Reserve Bank of New York, released on Monday, indicated a slight increase in the contraction rate of regional manufacturing activity in July. The New York Fed's general business conditions index dipped to -6.6 in July from -6.0 in June, where a negative reading denotes contraction. This decline was at odds with economists' expectations for an unchanged reading.
Despite the current contraction, firms expressed cautious optimism about future conditions. However, the index for future business conditions fell to 25.8 in July from 30.1 in June.
