Philadelphia manufacturing turnaround in September was short-lived: In October, Philadelphia’s regional manufacturing activity declined following growth in September. Falling from 23.2 to -12.8, the index for current general business activity recorded its largest decline since April. This month, 25.2% of firms reported decreases in activity, while just 12.4% of firms noted increases. On the other hand, the index for new orders improved, rising from 12.4 to 18.2, while the index for shipments fell from 26.1 to 6.0.
Why it matters: Despite Philadelphia’s manufacturing activity improving dramatically in September and growth appearing to have momentum, activity seems to have hit a snag in October. Nonetheless, demand indicators, such as new orders, continued to rise, indicating the downturn may only be temporary.
On the other hand, manufacturing activity brightened in New York: Manufacturing activity in the Second District increased in October, with the headline general business conditions index rising 19.4 points to 10.7. The new orders index jumped 23.3 points to 3.7, while the shipments index surged 31.7 points to 14.4.
What it means: In addition to improved conditions, firms’ optimism regarding the future rose to its highest level since January, a sign the improvement could have momentum. In the next six months, new orders are expected to increase and at an accelerated pace compared to the prior month. The future employment index also stepped up, suggesting an anticipated faster pace of employment growth over the next six months.
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