Philly Fed Index Indicates Notable Reacceleration In Growth In July

After reporting a slowdown in the pace of regional manufacturing growth in the previous month, the Federal Reserve Bank of Philadelphia released a report on Thursday showing the pace of growth reaccelerated by much more than expected in the month of July.

The Philly Fed said its diffusion index for current general activity jumped to 13.9 in July from 1.3 in June, with a positive reading indicating growth. Economists had expected the index to inch up to 2.9.

The bigger than expected increase by the headline index partly reflected significant turnarounds by new orders and shipments.

The new orders index surged to a positive 20.7 in July from a negative 2.2 in June, while the shipments index spike to a positive 27.8 in July from a negative 7.2 in June.

The report also showed a notable turnaround by employment, as the number of employees index shot up to a positive 15.2 in July from a negative 2.5 in June.

The Philly Fed said most future activity indicators also rose, suggesting more widespread expectations for overall growth over the next six months.

The diffusion index for future general activity soared to 38.7 in July from 13.8 in June, reaching its highest level since July 2021.

On the inflation front, the prices paid index dipped to 19.8 in July from 22.5 in June, while the prices received index jumped to 24.2 in July from 13.7 in June.

A separate report released by the Federal Reserve Bank of New York on Monday showed regional manufacturing activity contracted at a slightly faster rate in the month of July.

The New York Fed said its general business conditions index edged down to a negative 6.6 in July from a negative 6.0 in June, with a negative reading indicating contraction. Economists had expected the index to come in unchanged.

Looking ahead, the New York fed said firms remained fairly optimistic conditions would improve in the months ahead, although the index for future business conditions fell to 25.8 in July from 30.1 in June.