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Philadelphia Fed’s manufacturing index falls sharply in June

The Philadelphia Fed’s manufacturing index dropped sharply in June. The index fell to 19.9, reversing most of last month’s gains. The fall was larger than expected, and was mainly driven by a sharp decline in new orders that fell 22.7 points. Orders had seen an outsized rise in May, rising 22.2 points, and thus it dropped in June, taking orders closer to levels seen at the start of the year.

Outside of new orders, the report continued to imply positive manufacturing confidence in the region: prices paid dropped slightly, while employment remained stable from May. Shipments rebounded a bit with the index rising 2.9 points. The forward-looking index of general business activity six months ahead moderated slightly, mainly due to slightly lower expectations of new orders, shipments, and employment. Meanwhile, more companies expect rises in capital expenditures compared to May and also foresee a rise in final output prices.

“In all, we take little negative signal from the sharp decline in the index for June and continue to view factory activity in the region as being on a stable footing”, stated Barclays in a research report.

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