A report released by the Federal Reserve Bank of Philadelphia on Thursday showed a continued contraction in regional manufacturing in the month of May, although the pace of contraction slowed by more than expected.
The Philly Fed said its diffusion index for current activity surged to a negative 10.4 in May from a negative 31.3 in April.
While a negative reading still indicates a contraction in regional manufacturing activity, economists had expected the index to show a more modest recovery to a negative 19.8.
The bigger than expected rebound came after the Philly Fed Index dropped to its lowest level since May 2020 in the previous month.
The report said the indexes for new orders and shipments both increased for the second consecutive month but remained negative.
The new orders index jumped to a negative 8.9 in May from a negative 22.7 in April, while the shipments index rose to a negative 4.7 from a negative 7.3.
Meanwhile, the number of employees index slumped to a negative 8.6 in May from a negative 0.2 in April, indicating a decline in employment.
The report also showed the prices paid index edged up to 10.9 in May from 8.2 in April, although the prices received index slid to a negative 7.0 from a negative 3.3.
Looking ahead, the Philly Fed said the survey’s future indexes continued to reflect muted expectations for growth over the next six months.
The diffusion index for future general activity tumbled to a negative 10.3 in May from a negative 1.5 in April, marking the index’s third consecutive negative reading.
A separate report released by the New York Fed on Monday showed a substantial downturn in New York manufacturing activity in the month of May.
The New York Fed said its general business conditions index plummeted to a negative 31.8 in May from a positive 10.8 in April. Economists had expected the index to drop to a negative 2.5.
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