Philly Fed manufacturing index stutters in July

The Philadelphia Fed manufacturing index fell in 5.7 in July, printing well below our (13.0) and consensus (12.0) expectations for a modest monthly decline. The details of the survey confirm the signal from yesterday's Empire State manufacturing survey in suggesting a sluggish pace of activity at the beginning of Q3. New orders (7.1, previous: 15.2) and shipments (4.4, previous: 14.3) both declined on the month, but from a sharp move higher in June. The July data put these two components modestly above their prior trends. The employment index, however, fell to -0.4 (previous: 3.8), the weakest reading since January.

 The decline in the average workweek (4.0, previous: 4.7) was more muted and the remaining survey components were on net negative. The ISM-adjusted version of the index, which averages five of the underlying survey components instead of asking a separate question on general business conditions, fell to 49.2 (previous: 52.0). This weaker reading is in line with the ISM-adjusted version of the July Empire State index (49.9, previous: 51.9). Together, these readings imply a muted tone for Northeast regional manufacturing activity in July, says Barclays.