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Philadelphia Fed manufacturing sentiment index rises in January
The U.S. Philadelphia Fed manufacturing sentiment index rose 14.6 points in January to 17, more than reversing December’s 5 point fall. With January’s rise, the index now comes at its highest level since October 2018, a period when global activity started to weaken in the wake of a deepening drag from U.S-China trade tensions. January’s reading was slightly above consensus expectations.
“In our view, January's improvement likely reflects optimism about the Phase 1 trade agreement in the lead-up to yesterday's signing. Readings in January's range would generally be regarded as consistent with moderate increases in manufacturing activity”, said Barclays in a research report.
Even if the reading is a good sign that the drag on manufacturing from trade-related uncertainty is starting to fade in line with assumptions, it might be less informative than usual about conditions in the U.S. more widely, given the drag from the Boeing 737 Max production stoppage.
“Hence, we are not inclined to take much signal regarding the upcoming January reading for the manufacturing ISM, or about overall manufacturing production in the first few months of this year”, stated Barclays.
Delving into details, the index for new orders rose to 18.2, while the index for the number of employees rose 2.5 points to 19.3, with both indices recovering from declines in November and December. The shipments index rose 7.7 points to 23.4 coinciding with a fall in the index of order backlogs and reduction in the inventories index to -2.3. In the meantime, the prices paid index rose 6.2 points in January to 22.1.
Forward-looking components of the survey also rebounded a bit in January, with the index of anticipated general business conditions in six months rising to 38.4.