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Philly Fed: Mid-Atlantic manufacturing expands

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Yuangeng Zhang / Shutterstock.com Yuangeng Zhang / Shutterstock.com

Fourth consecutive increase; economy to continue expanding and may pick up in second half.

According to the Philadelphia Federal Reserve, mid-Atlantic regional manufacturing activity expanded in June.

According to its monthly survey on economic conditions, indicators for general activity, new orders, and shipments were positive for the fourth consecutive month and improved from their readings in May. Current employment was also higher among the reporting firms this month. The survey's indicators of future activity improved notably, suggesting that firms are more optimistic about continued growth over the next six months.

"Firms are more optimistic about continued growth over the next six months."

The diffusion index of current general activity increased from a reading of 15.4 in May to 17.8 in June. The index has remained positive for four consecutive months and is at its highest reading since last September. The current new orders and shipments indexes also moved higher during the month, increasing 6 points and 1 point, respectively.

Indicators also suggest improved labor market conditions.. The employment index remained positive for the 12th consecutive month and increased 4 points. The percentage of firms reporting increases in employment (22%) remained higher than the percentage reporting decreases (11%). The workweek index was also positive for the fourth consecutive month and increased 4 points.

Prices for inputs rise

The surveyed respondents indicated that price increases for purchased inputs were more widespread than in May. The prices paid index increased 12 points and has now increased 24 points over the past two months. Over 36 percent of the firms reported higher input prices this month compared with 25 percent last month. The prices received index, reflecting firms' own final goods prices, however, declined from 17.0 to 14.1. The percent of firms reporting higher prices (22%) exceeded the percentage reporting lower prices (8%), but 71% of the firms reported steady prices.

Optimism for the future

Most of the survey's broad indicators of future growth showed notable improvement in June. The future general activity index increased 15 points and is at its highest reading since October. The future indexes for new orders and shipments also showed improvement, increasing 21 points and 9 points, respectively. In addition, firms were more optimistic with respect to employment growth: The future employment index rose 7 points. The percentage of firms expecting growth in their employment edged higher, from 31 percent in May to 35 percent this month. 

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