FX.co ★ Philly Fed Index Unexpectedly Indicates Contraction In November

A recent report from the Federal Reserve Bank of Philadelphia, published on Thursday, indicates a broad easing of regional manufacturing activity in November. The diffusion index for current general activity notably dropped to -5.5 in November from +10.3 in October, signaling contraction. This result contrasts with economists' forecasts of a slight decrease to +8.0.

The significant decline in the main index is mainly attributed to decreases in the new orders and shipments indexes, which, despite the drop, remained positive. Specifically, the new orders index decreased to 8.9 from October's 14.2, and the shipments index fell to 4.5 from 7.4.

Conversely, the report highlights an improvement in the employment sector, with the number of employees index rising to 8.6 from -2.2, suggesting an uptick in employment figures.

Furthermore, firms remain optimistic about future growth over the next six months, with growth expectations becoming more widespread. The diffusion index for future general activity sharply increased to 56.6 from 36.7, reaching its highest level since June 2021.

Regarding inflation, the index for prices paid dipped to 26.6 from 29.7, and the prices received index also fell slightly to 14.3 from 17.9.

In a separate development, a report from the Federal Reserve Bank of New York last Friday revealed a marked recovery in manufacturing activity for November. The general business conditions index soared to 31.2 from -11.9, surpassing expectations of a slight climb to -0.7. This marked improvement propels the index to its highest reading since December 2021.