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Mid-Atlantic manufacturing activity highest since 2011

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Mid-Atlantic manufacturing activity highest since 2011

Obamacare having a negative impact.

According to a monthly survey by the Federal Reserve Bank of Philadelphia, the mid-Atlantic region’s manufacturing sector is continuing to grow.

The survey’s indicator for general activity was higher in August, but indicators for new orders, shipments, and employment, while positive, fell from their readings in July. The survey’s broad indicators of future activity increased, suggesting that firms remain optimistic about continued growth over the next six months.

 "Over 18 percent of the firms indicated that the number of workers they employ was lower because of the ACA."

Activity Index Highest Since 2011

The diffusion index of current general activity increased from a reading of 23.9 in July to 28.0 this month. The index has increased for three consecutive months and is at its highest reading since March 2011  The new orders and shipments indexes remained positive but fell to near their levels in June. The new orders index decreased 20 points, while the shipments index decreased 18 points.

The current indicators for labor market conditions suggested continued modest expansion in employment. The employment index remained positive for the 14th consecutive month but declined 3 points from its reading in July. The percentage of firms reporting increases in employment (25%) exceeded the percentage reporting decreases (16%). The workweek index was positive for the sixth consecutive month and increased 1 point.

Six-Month Indicators Improve

Most of the survey’s broad indicators of future growth showed improvement this month. The future general activity index increased 8 points and is at its highest reading since June 1992. The index has increased for four consecutive months. The future indexes for new orders and shipments also improved this month, increasing 5 and 10 points, respectively. Firms remained relatively optimistic with respect to employment growth, although the future employment index fell 4 points. Nearly 37% of the firms are expecting growth in their employment levels over the next six months, but 12% of the firms expect employment reductions.

While most broad indicators of future growth have been improving, the survey’s future capital spending index has been slipping. Although the index decreased just 1 point this month, its reading, at 17.5, is now the lowest it has been in seven months.

Interestingly, over 18 percent of the firms indicated that the number of workers they employ was lower because of the ACA; 3% indicated higher levels. The same percentage (18%) indicated that the proportion of part-time workers had increased. Regarding health insurance benefit coverage, 41 % said their coverage was unchanged, but 52% indicated modifications to their offerings. Among those modifying their health insurance coverage, higher deductibles (91%), higher worker contributed premiums (88%), and higher out-of-pocket maximums (77%) were the most cited changes.

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