Manufacturing Activity in Philly Fed’s District Holds Up at Solid Expansion Levels in June

Manufacturing activity in the Philadelphia area continued to expand at a robust pace in June, data from a survey released Thursday by the Federal Reserve Bank of Philadelphia showed.

The index for current general activity decreased to 30.7 in June from 31.5 in May, broadly matching the 30.0 consensus forecast from economists’ polled by The Wall Street Journal.

The survey polls manufacturers in the Third Federal Reserve District–which covers eastern Pennsylvania, southern New Jersey and Delaware–about the direction of change in overall business activity at their plants on a monthly basis. A reading above zero indicates expansion.

The index signals that overall manufacturing activity in the region continued to expand at a solid clip, although at a lower pace compared to March and April’s multi-decade high levels.

Factories across the U.S. are facing difficulties to keep up with strong demand amid increasing input and labor shortages that are constraining output growth.

In June, 42% of firms in the Philly Fed’s district reported increases in overall activity, while 11% reported decreases compared with the previous month.

The survey’s indicators for general activity, new orders, and shipments remained elevated, although movements were mixed, the report said.

The new orders index decreased about 10 points to 22.2 in June, while the shipments index rose about 6 points to 27.2.

Firms in the area continued to report increases in employment. This index rose about 11 points to 30.7, with 39% of the respondents reporting increases and 8% reporting decreases.

The prices paid diffusion index rose for the second consecutive month, gaining about 4 points to 80.7, its highest reading since June 1979. The prices received index rose for the fourth consecutive month, moving up about 9 points to 49.7, its highest reading since October 1980, the report said.

The survey’s indicators for future general activity signal that firms expect growth over the remainder of the year.

The diffusion index for general activity over the next six months increased 17 points to 69.2, its highest level in nearly three decades. The future new orders index, shipments and employment indexes also improved compared with the previous month.
Source: Dow Jones

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