Philly Fed Index Indicates Notably Slower Growth In May

(RTTNews) - Philadelphia-area manufacturing activity saw a notable slowdown in the pace of growth in the month of May, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.

The Philly Fed said its diffusion index for current general activity tumbled to 4.5 in May from 15.5 in April, although a positive reading still indicates growth. Economists had expected the index to decrease to 8.0.

The bigger than expected decline by the headline index partly reflected a downturn by new orders, as the new orders index plunged to a negative 7.9 in May from a positive 12.2 in April.

The shipments index also tumbled to a negative 1.2 in May from a positive 19.1 in April, indicating a downturn in shipments.

Meanwhile, the number of employees index rose to a negative 7.9 in May from a negative 10.7 in April, but a negative reading still suggests a decrease in jobs.

The report also said the prices paid index fell to 18.7 in May from 23.0 in April, while the prices received index crept up to 6.6 in May from 5.5 in April.

Looking ahead, the Philly Fed said firms continue to expect growth over the next six months, although the diffusion index for future general activity edged down to 32.4 in May from 34.3 in April.

The Federal Reserve Bank of New York released a separate report on Wednesday showing regional manufacturing activity unexpectedly contracted at a slightly faster rate in the month of May.

The New York Fed said its general business conditions index edged down to a negative 15.6 in May from a negative 14.3 in April, with a negative reading indicating contraction. Economists had expected the index to rise to a negative 10.0.