The Federal Reserve Bank of Philadelphia reported on Thursday a notable improvement in regional manufacturing activity for January. The diffusion index for current general activity, as released by the Philly Fed, soared to an impressive 44.3 in January, rising sharply from a negative 10.9 in December. A positive reading here signifies growth, and this leap far exceeded economists' predictions of a negative 5.0.
This remarkable rise elevated the Philly Fed index to its highest point since April 2021, when it also struck 44.4. Driving this surge was a significant increase in new orders, with the corresponding index leaping to 42.9 from a negative 3.6 observed in December—marking its peak since November 2021.
The shipments index reflected similar momentum, climbing to 41.0 in January from 1.7 in December, reaching a level not seen since October 2020. Additionally, the employment index rose to 11.9, improving from December's 4.8.
The report further indicated that the prices paid index increased to 31.9, up from 26.6, while the prices received index made a substantial jump to 29.7 from 5.6. As for future projections, the Philly Fed detailed that the diffusion index for future general activity increased to 46.3 in January from 33.8 in December. This rise points to a broader expectation for growth over the next six months.
Conversely, a report from the Federal Reserve Bank of New York, issued on Wednesday, highlighted an unexpected downturn in regional manufacturing activity for January. The New York Fed's index for general business conditions fell to a negative 12.6 from a positive 2.1 in December, where a negative reading signals contraction. This was contrary to economists' expectations for a slight increase to 3.0.
Despite this setback, the New York Fed noted increased optimism for future conditions, as reflected in the index for future business activity, which rose to 36.7 in January from 26.9 in December.
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