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Philly Fed index drops more than expected in November

By Michele Maatouk

Date: Thursday 15 Nov 2018

Philly Fed index drops more than expected in November

(Sharecast News) - Manufacturing conditions in the Philadelphia region deteriorated more than expected in November, according to a survey released on Thursday.
The Philadelphia Fed's index for current manufacturing activity slumped to 12.9 this month from 22.2 in October, marking its lowest reading since August and coming in below expectations for a much smaller drop to 20.0.

Nearly 35% of manufacturers reported increase in overall activity this month, while 22% reported decreases.

The new orders index fell 10 points to 9.1 and the current shipments index slipped three points to 21.6. The current employment index remained positive but ticked down three points to 16.3 and the current workweek index fell nearly 15 points to 6.3, hitting its lowest level in two years.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the Philly Fed and NY Empire State manufacturing surveys are "noisy" from month-to-month, but the big picture this year is that the Philly Fed survey is weakening, while the trend in the Empire State is steady.

"Presumably, this means that the Philly survey is more susceptible to the trade war with China than the Empire State. The national ISM manufacturing index seems to be about half-way between these surveys, and overall the November numbers suggest that October's sharp drop in the ISM would be repeated. Still, the key story here is that the trade war is constraining activity, which otherwise probably would have been stronger, thanks to the tax cuts."

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