Philly Fed Survey “Explodes,” New Orders Rise
Manufacturing activity in the Philadelphia region showed a sharp recovery in January, signaling that the US factory sector is starting the year on a more solid note. The Philadelphia Fed Manufacturing Survey rebounded from the previous month's negative reading and exited the contraction zone.
The Philly Fed's headline index, released Thursday, rose 21.4 points to 12.6 in January—the highest since September—after a revised reading of -8.8 in December. This result also far exceeded market expectations, which had expected the index to remain in negative territory.
Improvements were evident in the core activity components. New orders rose to 14.4 and shipments strengthened to 9.5, indicating improving demand and distribution. Meanwhile, inventories fell to -8.4, their lowest level since mid-2024, indicating that companies are either reducing inventories or have not been able to replenish stocks as quickly as the increase in activity.
Employment conditions remained positive, although not as strong as the previous month. The employment index remained at 9.7, while hours worked fell slightly to 9.1—reflecting ongoing expansion, but companies remain cautious about increasing workloads.
Price pressures haven't completely disappeared either. The prices paid index fell slightly to 46.9, but still indicates high input costs. On the other hand, prices received actually rose to 27.8, indicating some businesses are still able to pass on costs to selling prices.
Looking ahead, optimism remains but is becoming more subdued. The future activity index fell to 25.5, with future new orders weakening to 32.9 while future shipments rose to 40.8. Companies still see growth opportunities in the next six months, but with caveats: hiring is projected to increase moderately and price pressures are still likely to persist.
Source: Newsmaker.id
