Philadelphia Fed manufacturing index drops in August, but activity to continue on strong footing

The U.S. Philadelphia Fed manufacturing index dropped in August, but came in above consensus expectations. The index dropped 0.6 points to 18.9 in August, as compared with consensus expectations of 18. Even though the index is pretty below the high of 43.3 seen in February, it continues to be well within the expansionary territory and is in line with manufacturing activity in the region.

Delving into details, new orders and shipments rebounded markedly by 18.3 points and 29.4 points to 20.4 and 29.4, respectively. Prices paid and employment remained widely stable at 21.1 and 10.1 in August. The average workweek rebounded to 18.8 from 3.8 in July.

Moreover, inventories moved in to negative territory for the first time since February, dropping from 0.7 in July to -6.1 in August. This implies stronger demand. Overall, today’s details imply that manufacturing activity continues to be on a strong footing in the region, noted Barclays in a research report.

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