Philly Fed Index Indicates Faster Contraction But More Upbeat Outlook

(RTTNews) - Philadelphia-area manufacturing activity unexpectedly contracted at an accelerated rate in the month of December, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.

The Philly Fed said its diffusion index for current general activity slid to a negative 10.5 in December from a negative 5.9 in November, with a negative reading indicating a contraction. Economists had expected the index to inch up to a negative 3.0.

The unexpected decrease by the headline index partly reflected a substantial downturn in new orders, as the new orders index plunged to a negative 25.6 in December from a positive 1.3 in November.

The number of employees index also dipped to a negative 1.7 in December from a positive 0.8 in November, indicating a modest pullback in jobs.

The report also said the shipments index climbed to a negative 10.8 in December from a negative 17.9 in November, although a negative reading still indicates a contraction.

On the inflation front, the prices paid index surged to 25.1 in December from 14.8 in November, while the prices received index edged down to 13.6 from 14.8.

The Philly Fed said most future activity indicators rose during the month, suggesting more widespread expectations for overall growth over the next six months.

The diffusion index for future general activity jumped to a positive 12.1 in December from a negative 2.1 in November, reaching its highest reading since July.

On Monday, the Federal Reserve Bank of New York released a separate report showing a substantial downturn in regional manufacturing activity in the month of December.

The New York Fed said its general business conditions index plunged to a negative 14.5 in December after surging to a positive 9.1 in November. Economists had expected the index to fall to a positive 2.0.