Main index comes in at minus 0.7, better than August’s minus 7.7
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Manufacturing activity in the Philadelphia region contracted in September for a second straight month, according to a report released Thursday.
The Federal Reserve Bank of Philadelphia’s diffusion index of current activity was a minus 0.7 in September, an improvement from the minus 7.7 level in August and not far off the 0.0 reading that economists polled by MarketWatch expected. Nonetheless, the reading is well below the 21.4 reading in May.
Firms reported decreases in new orders and shipments for the second straight month, while employment levels remained steady. Manufacturing executives expect growth in business over the next six months, but optimism remains below levels of earlier in the year.
The Philly Fed’s report reinforces statistics showing a U.S. economy barely growing, if at all. It also confirms data, reported Wednesday, showing flagging factory activity in the New York region for early September.
Andrew Tilton, Goldman Sachs’ senior U.S. economist, predicted in a report published Wednesday that the national Institute for Supply Management’s manufacturing index will fall to the 50 no-growth level or below by early 2011. In part, Tilton’s prediction came because the New York and Philadelphia Fed surveys are below their national averages of the past decade.
Using the same methodology as the ISM report, the Philly Fed indicator could be said to have climbed 1.5 points to 45.9, according to Jennifer Lee, senior economist at BMO Capital Markets.
Last month’s Philly Fed report jarred financial markets -- the first negative reading for the gauge in a year. That said, the S&P 500 (SPX 1,122, -3.49, -0.31%) has rallied back from a bearish August, recovering about 4% from the 1,076 close on Aug. 19.
