RTTNews - While activity in the mid-Atlantic region's manufacturing sector has continued to contract in the month of June, the Federal Reserve Bank of Philadelphia released a report on Thursday showing that the pace of contraction has slowed by much more than economists had been expecting.
The Philly Fed said its index of activity in the manufacturing sector rose to a negative 2.2 in June from a negative 22.6 in May, although a negative reading still indicates a contraction. Economists had been expecting a much more modest increase to a reading of negative 17.0.
With the bigger than expected increase, the index rose to its highest reading since September of 2008, when the index was positive for one month.
A turnaround in shipments contributed to the improvement in the sector, with the shipments index jumping to a positive 2.1 in June from a negative 19.0 in May.
The report also showed a notable slowdown in the pace of contraction in new orders, as the new orders index rose to a negative 4.8 from a negative 25.9 in the previous month.
However, the Philly Fed said that firms reported sustained declines in employment and work hours, which it said is indicative of ongoing weakness.
While the number of employees index rose to a negative 21.8 in June from a negative 26.8 in May, the average employee workweek index fell to a negative 26.6 from a negative 23.2.
On the inflation front, the report showed that firms reported less widespread declines in the prices paid for inputs and the prices received for their own manufactured goods.
The prices paid index rose to a negative 13.0 in June from a negative 22.8 in May, while the prices received index jumped to a negative 16.6 from a negative 33.8.
Looking ahead, the Philly Fed noted that most of the indicators of future activity showed continued improvement, suggesting that the region's manufacturing executives are becoming more optimistic about a recovery over the next six months.
The report showed that the future general activity index rose to 60.1 in June from 47.5 in May, remaining positive for the sixth consecutive month. With the increase, the index rose to its highest level since September of 2003.
Earlier this week, the New York Federal Reserve released a report showing that conditions for New York manufacturers have continued to deteriorate in the month of June, with the index of activity in the sector falling by much more than expected.
The New York Fed said its general business conditions index fell to a negative 9.41 in June from a negative 4.55 in May, with a negative reading indicating a deterioration in conditions. Economists had expected the index to edge down to a negative 5.10.
While the index fell by more than economists had been expecting, it remains well above the record low of negative 38.2 set in March.
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