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Philly Fed: Mid-Atlantic manufacturing remains in contraction

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Philly Fed:  Mid-Atlantic manufacturing remains in contraction

Sixth consecutive month of contraction reported.

According to the Philadelphia Federal Reserve, mid-Atlantic regional manufacturing activity contracted again in February.

According to its monthly survey on economic conditions, the general activity index rose slightly during the month, from -3.5 in January to -2.8 this month, but remained in contraction territory. This result actually beat analysts’ expectations of a -4.0 reading.

However, the index reflects the six straight months of negative manufacturing growth in the region.

The employment picture also remained relatively bleak.

Results from the survey were generally downbeat, with the indices for current new orders, inventories, prices and backlogs of unfilled orders all declining from already weak levels in January.

The employment picture also remained relatively bleak.  The survey’s labor market indicators suggest continued weak employment conditions. The employment index decreased 3 points, from -1.9 to -5.0. About 63% of the firms reported no change in employment this month, and the percentage reporting decreases (20%) was slightly larger than the percentage reporting increases (15%).

One bright spot in the report was the shipments index, which remained in positive territory for the second consecutive month.  However, the reading fell 7 points from January.

Confidence in future wanes

The survey’s index for future general activity fell from a reading of 19.1 in January to 17.3 this month. The index has trended down since last summer and is now at its lowest reading since November 2012. The largest share of firms expects an increase in activity over the next six months (42%), but 25% expect declines. The future indexes for new orders and shipments also edged down slightly this month. Firms’ forecasts for future employment have been moderating the past few months. The future employment index fell from 5.5 to 2.3 this month, the third consecutive decline. The future workweek index also declined into negative territory for the first time in six months.

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