Manufacturing activity in the Philadelphia area saw a decline in December, as reported by the Federal Reserve Bank of Philadelphia on Thursday. The bank's diffusion index for current general activity fell sharply to -16.4, down from November's -5.5, signaling a contraction. This was contrary to economists' predictions, who had anticipated a rise to 3.0.
This unexpected downturn marks the index's lowest point since April 2023, when it was at -26.3. The drop in the headline index was primarily due to decreases in new orders and shipments, with the new orders index decreasing to -4.3 from November's 8.9, and the shipments index declining to -1.9 from November's 4.5.
Despite the decline, the number of employees index slightly fell to 6.6 from 8.6 in November, but it still indicates an overall increase in employment. Additionally, the report highlighted a rise in the prices paid index, climbing to 31.2 from 26.6, while the prices received index saw a decrease, moving down to 7.3 from 14.3.
Looking forward, the survey suggests a generally positive outlook for growth over the next six months, despite the future general activity index dropping significantly to 30.7 from November's 56.6.
In a related development, the Federal Reserve Bank of New York released data earlier in the week indicating a significant reduction in its regional manufacturing activity index for December, which declined to 0.2 from November's 31.2. Although still positive, signaling growth, this figure was well below the anticipated 12.0.
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