Philadelphia Fed: Manufacturing In Mid-Atlantic Region Well Below Expectations

The Philadelphia Federal Reserve’s gauge of manufacturing activity in the mid-Atlantic region dropped to 5.2 in February from 6.3 the month prior. The Manufacturing Business Outlook Survey widely missed Wall Street expectations of a rise to 9.3.

The current activity index fell for the third consecutive month, as did the future activity index and the diffusion index for current general activity.

The current new orders index fell 3 points, but the shipments and unfilled orders indexes turned positive and rose 15 and 16 points, respectively. The diffusion index for current general activity fell slightly, from a reading of 6.3 in January to 5.2 this month, with half of respondents indicating no change from the previous month.

The index for delivery times increased 6 points but remained negative, while the index for inventories rose 16 points.

The survey’s indicators for current labor market conditions actually showed a slight improvement this month, adding 6 points and returning to positive territory. The percentage of firms reporting increases in employment — at 21 percent — beat out the percentage reporting decreases, at 17 percent. However, the workweek index was negative with almost no change from last month, indicating wage growth stubbornly remains non-existent.

Most firms (55 percent) reported an increase in underlying demand, while 20 percent reported a decrease. Fifty-four percent of the firms anticipate increasing production, and 33 percent expect to cut production. The diffusion index for general future activity fell from a reading of 50.9 in January to 29.7 in February.

Special Questions (February 2015)