A report released by the Federal Reserve Bank of Philadelphia on Thursday showed a significant acceleration in the pace of growth in regional manufacturing activity in the month of November.
The Philly Fed said its diffusion index for current activity jumped to 39.0 in November from 23.8 in October, with a positive reading indicating growth. Economists had expected the index to inch up to 24.0.
The much bigger than expected increase by the headline index was partly due to a substantial acceleration in the pace of growth in new orders, as the new orders index spiked to 47.4 in November from 30.8 in October.
The shipments index also crept up 32.1 in November from 30.0 in October, although the number of employees index slipped to 27.2 from 30.7.
On the inflation front, the Philly Fed noted firms continued to report sharp increases in prices for inputs and their own goods.
The prices paid index jumped to 80.0 in November from 70.3 in October, while the prices received index shot up to 62.9 from 51.1, reaching its highest level since June of 1974.
Looking ahead, the report said the future indexes continue to indicate that the firms expect growth over the next six months. The diffusion index for future general activity rose to 28.5 in November from 24.2 in October.
“Manufacturers stayed enthusiastic about the road ahead in spite of ongoing supply-side challenges,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics. “We look for voracious goods demand and a plethora of unfilled orders to keep factories pumping out goods at a very healthy pace.”
He added, “We also expect that businesses will continue to face major supply-chain problems next year, though headwinds should start to ease in the second half of 2022.”
The New York Federal Reserve released a separate report on Monday showing New York manufacturing activity grew strongly in the month of November.
The New York Fed said its general business conditions index jumped to 30.9 in November from 19.8 in October, with a positive reading indicating growth. Economists had expected the index to rise to 21.6.
However, the report said firms were less optimistic about the six-month outlook than they were last month, with the index for future business conditions tumbling to 36.9 in November from 52.0 in October.
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