Philly Fed Index Indicates Continued Contraction In June

The Federal Reserve Bank of Philadelphia released a report on Thursday showing regional manufacturing activity contracted at a modestly faster rate in the month of June.

The Philly Fed said its diffusion index for current activity fell to a negative 13.7 in June from a negative 10.4 in May, with a negative reading indicating contraction. Economists had expected the index drop to a negative 14.0.

The modest decrease by the headline index partly reflected an accelerated contraction in new orders, as the new orders index slipped to a negative 11.0 in June from a negative 8.9 in May.

Meanwhile, the shipments index surged to a positive 9.9 in June from a negative 4.7 in May, reaching its highest level since January.

The number of employees index also jumped to a negative 0.4 in June from a negative 8.6 in May, although the negative reading still indicates slight contraction.

The report also said the prices paid index edged down to 10.5 in June from 10.9 in May, while the prices received index climbed to a positive 0.1 in June from a negative 7.0 in May.

Looking ahead, the Philly Fed said most future indicators improved but noted expectations for growth over the next six months remained tempered.

The diffusion index for future general activity soared to a positive 12.7 in June from a negative 10.3 in May, showing the first positive reading in four months and the highest reading since March 2022.

Meanwhile, a separate report released by the Federal Reserve Bank of New York on Thursday showed a significant turnaround in regional manufacturing activity in the month of June.

The New York Fed said its general business conditions index soared to a positive 6.6 in June from a negative 31.8 in May, with a positive reading indicating growth. Economists had expected the index to jump to a negative 15.1.

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