According to firms responding to this month’s Manufacturing Business Outlook Survey, manufacturing activity in the Philadelphia Fed region declined again in October.
The decline in October marks the first bac-to-back negative readings since February 2013.
The indicator for general activity remained negative, while the new orders and shipments indexes turned negative this month.
The Business Outlook Index for October was reported at -4.5, which was below the consensus for a reading of -1.0 but above last month’s reading of -6.0 (Aug: +8.3%, July: +5.7).
According to the report, “For the second consecutive month, regional manufacturers reported declines in overall activity. Indexes for new orders, shipments, employment, and average work hours all dipped into negative territory this month. On balance, firms reported near-steady prices. Despite the reported deterioration in current conditions, most firms continued to expect growth over the next six months, although the levels of optimism as suggested by the survey’s future indexes weakened across all broad indicators this month.”
The New Orders index was reported at -10.6, which a large drop from last month’s reading of +9.4 (August: +5.8).
On the subject of jobs, “The survey’s indicators for labor market conditions suggest slightly weaker employment. The percentage of firms reporting declines in employment (15 percent) was slightly greater than the percentage reporting increases (13 percent). The employment index declined nearly 12 points, from 10.2 to -1.7. Firms also reported overall declines in average work hours in October, and the workweek index was negative for the first time since May.”
According to Investopedia, the Philly Fed Index is a regional federal-reserve-bank index measuring changes in business growth. The index is constructed from a survey of participants who voluntarily answer questions regarding the direction of change in their overall business activities. The survey is a measure of regional manufacturing growth. When the index is above 0 it indicates factory-sector growth, and when below 0 indicates contraction.