By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Philadelphia-area manufacturers reported a slight increase in activity in January, according to a closely followed index released Thursday that points to an economy moving but not racing along.
The Philadelphia Fed’s index of current activity rose to 7.3 in January from 6.8 in December. Last week, the Philadelphia Fed revised data from all of 2011, including a downward revision to December’s report, after adjusting seasonal adjustment factors.
Economists polled by MarketWatch had anticipated a stronger improvement, to a reading of 9.3, and U.S. stocks SPX +0.24% lost steam after the report’s release a half-hour into the trading day.
But the gauge nonetheless reached its highest level since October and was the second-highest reading since April.
The closely followed new-orders index was positive for a fourth month but fell to 6.9 from 10.7 in December. A gauge on shipments also fell but remained in positive territory, while inventories improved to -6.3 from -11.5.
The current employment index has now been positive for five consecutive months and edged up narrowly to 11.6 from 11.5.
This month’s survey also included special questions on employment, and found that the biggest reason for plans to expand employment over the next six to 12 months was expectation of high sales growth — and the most frequently cited reason for firms not doing so were the need to keep operating costs low and low expectations for sales growth.
The Philadelphia Fed index is a diffusion index, taken by asking manufacturers whether conditions have improved or got worse compared to the prior month. The gauge carries particular cache because it’s been conducted since 1968.
A similar gauge from the New York region showed the fastest rate of growth in nine months. See earlier story on New York-area manufacturing.
Economic data of late has generally been on the upswing. Earlier, the Labor Department reported that weekly jobless claims fell by 50,000 to the lowest level in nearly four years. See story on claims.
