A report released by the Federal Reserve Bank of Philadelphia on Thursday showed a significant acceleration in the pace of growth in regional manufacturing activity in the month of October.
The Philly Fed said its diffusion index for current activity jumped to 32.3 in October from 15.0 in September, with a positive reading indicating growth in regional manufacturing. Economists had expected the index to edge down to 14.0.
With the much bigger than expected increase, the Philly Fed Index spiked to its highest level since before the coronavirus– lockdowns.
The sharp increase by the headline index came as the new orders index soared to 42.6 in October from 25.5 in September and the shipments index surged up to 46.5 from 36.6.
On the other hand, the report said the number of employees index dipped to 12.7 in October from 15.7 in September, indicating a modest slowdown in the pace of job growth.
The prices paid index rose to 28.5 in October from 25.1 in September, while the prices received index fell to 14.0 from 18.4 in the previous month.
“Manufacturing has rebounded strongly since the peak damage phase of the crisis, but its recovery will slow as the health crisis drags on,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.
He added, “Consumer and business demand for goods will soften as economic momentum weakens and lawmakers are unlikely to provide meaningful fiscal support.”
Looking ahead, the Philly Fed said most future indexes increased and continue to reflect optimism among firms about growth over the next six months.
The diffusion index for future general activity climbed to 62.7 in October from 56.6 in September, reaching its highest reading since June.
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