FX.co ★ Philly Fed Index Indicates Notably Slower Growth In May

Philadelphia-area manufacturing activity experienced a notable deceleration in growth for May, as highlighted by a report issued by the Federal Reserve Bank of Philadelphia on Thursday.

The Philly Fed revealed that its diffusion index for current general activity dropped to 4.5 in May from April's 15.5. While a positive reading still signifies growth, the decline was more substantial than economists' forecasts of a decrease to 8.0.

The unexpected decline in the headline index was partly due to a significant drop in new orders, with the new orders index plunging to -7.9 in May from a positive 12.2 in April.

Likewise, the shipments index fell to -1.2 in May from a positive 19.1 in April, indicating a reduction in shipments.

Conversely, the number of employees index ascended to -7.9 in May from -10.7 in April; however, the negative reading still points to a reduction in employment.

The report further noted that the prices paid index decreased to 18.7 in May from April's 23.0, whereas the prices received index slightly increased to 6.6 in May from 5.5 in April.

Looking forward, the Philly Fed mentioned that firms persist in expecting growth over the forthcoming six months, although the diffusion index for future general activity slightly edged down to 32.4 in May from 34.3 in April.

Additionally, a separate report released by the Federal Reserve Bank of New York on Wednesday indicated that regional manufacturing activity contracted at a marginally accelerated pace in May.

The New York Fed stated that its general business conditions index marginally declined to -15.6 in May from -14.3 in April, with a negative reading signaling contraction. Economists had anticipated the index would improve to -10.0.