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Philly Fed index surges in July with new orders and hiring strong

By Alexander Bueso

Date: Thursday 18 Jul 2019

(Sharecast News) - A key index for manufacturing sector conditions in the US mid-Atlantic region snapped back in July amid a surge of new orders and with hiring ramping up quickly.
The Federal Reserve bank of Philadelphia's closely-followed factory sector index jumped from a reading of 0.3 points for June to 21.8 in July.

Economists had only been expecting a timid rise to 5.0.

Perhaps the most important sub-index, that for new orders, improved from 8.3 to 18.9, with another tracking staffing levels in the sector doubling from 15.4 to 30.0.

Firms also extended the length of their work shifts, with a sub-index tracking the average employee workweek rising from 7.3 to 23.0.

The sub-index linked to the prices paid by firms meanwhile rose from 12.9 to 16.1.

Commenting on the Philly Fed survey results, Ian Shepherdson at Pantheon Macroeconomics said they were "very volatile" and that a recovery from June's weak print had always been to be expected given that the survey was carried out during the same weak as the trade tensions with Mexico and following the imposition of higher US tariffs on Chinese exports.

Nonetheless, the report was "unambiguously" good news, he said, highlighting the strength in the various subindices for orders, shipments, employment and the workweek and made a rebound in the national level ISM Purchasing Managers' Index "much more likely" although not guaranteed.

"This report is unambiguously good news from a sector which spent the first half of the year in recession. Like most of the other recent data, the report suggests that the economy does not need lower rates, and that a 50bp easing on 7/31 would be a mistake."

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