Philly Fed Index Unexpectedly Slumps Further Into Negative Territory In December

(RTTNews) - A report released by the Federal Reserve Bank of Philadelphia on Thursday unexpectedly showed a notable decrease by its reading on regional manufacturing activity in the month of December.

The Philly Fed said its diffusion index for current general activity slumped to a negative 10.2 in December from a negative 1.7 in November, with a negative reading indicating contraction. Economists had expected the index to climb to a positive 3.0.

While the headline index remained in negative territory for the third consecutive month, the report showed significant turnarounds by new orders and shipments.

The new orders index surged to a positive 5.0 in December from a negative 8.6 in November, while the shipments index shot up to a positive 3.2 in December from a negative 8.7 in November.

The report also said the number of employees index jumped to 12.9 in December from 6.0 in November, reaching its highest level since May.

Looking ahead, the Philly Fed said most of the survey's future indicators softened but continued to suggest widespread expectations for growth over the next six months.

The report said the diffusion index for future general activity slid to 41.6 in December from 49.6 in November, marking its first decrease since June.

On the inflation front, the Philly Fed said the prices paid index tumbled to 43.6 in a six-month low of December from 56.1 in November, while the prices received index jumped to 24.3 in December from 17.7 in November.

A separate report released by the Federal Reserve Bank of New York on Monday showed an unexpected downturn by regional manufacturing activity in the month of December.

The New York Fed said its general business conditions index plunged to a negative 3.9 in December from a positive 18.7 in November, with a negative reading indicating contraction. Economists had expected the index to fall to a positive 10.6.

The steep drop by general business conditions index came a month after it surged to its highest level in a year.

Meanwhile, the New York Fed said firms have become more optimistic conditions will improve over the next six months, with the future general business conditions index jumping to 35.7 in December from 19.1 in November.