- Advertisement -
- Advertisement -
BusinessPhiladelphia Fed’s manufacturing gauge falls to lowest reading in...

Philadelphia Fed’s manufacturing gauge falls to lowest reading in two years

-

- Advertisment -

The numbers: The Philadelphia Federal Reserve said Thursday its gauge of regional manufacturing activity fell sharply to 2.6 in May from 17.6 in the prior month.

This is the lowest level of activity since the recession in early 2020. Economists polled by the Wall Street Journal expected a 15 reading.

Any number above zero indicates expansion in the manufacturing sector.

Key details: The headline index is based on a single stand-alone question about business conditions unlike the national ISM manufacturing index which is a composite based on components. The subcomponents looked a little stronger.

The barometer on new orders increased 4.3 points to 22.1. The shipments index jumped 16.2 points to 35.3, its highest level since last October.

The employment index fell 16 points to 25.5 in May.

Firms continued to report increases in prices for inputs and their own products. Firms continue to see rising prices over the next year, with the median forecast for the rate of consumer inflation at 6.5%, up from 5% when the question was last asked in February.

The measure on six-month business outlook slumped 5.7 points to 2.5 in May.

Big picture: The Philadelphia Fed index is one of several regional manufacturing gauges that offer timely reads of the manufacturing sector.

Earlier this week, the similar Empire State survey released by the New York Fed showed manufacturing activity contracted, with the business conditions index plunging 36.2 points to negative 11.6 in May. 

Economists said the moderation in activity came from slower demand due to higher prices, broken supply chains and shortages.

In April, the national ISM manufacturing index fell to 55.4%, the lowest reading since July 2020. The data for May will be released on June 1.

What are they saying? “We’re much less happy, though, about the second straight drop in capex plans for the next six months, to 9.6, from 19.9 in April and 24.8 in March. This might just be noise, or a temporary reaction to the surge in energy prices, but if it is sustained and replicated across the country, it would send a clear signal of a potential softening in capex,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Market reaction: Stocks
DJIA,
-0.73%

SPX,
-0.49%
were set to open lower Thursday on continued fear that higher inflation will lead to slower consumer spending. The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.787%
also softened on the prospect of slower growth.

- Advertisement -

Latest news

Childminder wins heated planning permission battle against council over her £20,000 shed

Childminder wins heated planning permission battle against...

Rylan Clark ‘has been dating Declan Doyle since April but has tried to keep the relationship secret’

Rylan Clark has reportedly been dating Ex On The Beach star Declan Doyle since April but has tried to...
- Advertisement -

EasyJet executive quits over flight chaos

The executive responsible for easyJet’s operations has left the airline following thousands of flight cancellations and disruption. The low-cost...

Must read

- Advertisement -

You might also likeRELATED
Recommended to you

- Advertisement -