Economic Indicators

Philly Fed manufacturing index contracted in March despite monthly improvement

By Scott Kanowsky — A key measure of U.S. manufacturing activity came in below expectations in March, but improved marginally compared to the prior month, as recent price pressures showed potential signs of easing.

The Philadelphia Federal Reserve’s manufacturing index inched up slightly for the second straight month to -23.2 from -24.3 in February but remained well within contraction territory. Economists’ forecasts had seen the figure jumping to -15.6.

New orders and shipments both declined to their lowest marks since May 2020, while companies reported a drop in employment as well.

Firms continued to report an overall increase in prices, reflecting a spike in inflation that has been plaguing businesses and consumers alike. Even still, the indexes for prices paid by producers and those received by customers both declined, the Philly Fed survey showed.

Meanwhile, the survey’s broad indicators for future activity suggested that manufacturers have “subdued expectations for growth over the next six months,” the Philly Fed said in a statement.

In a separate data point released on Thursday, the weekly number of Americans filing for unemployment benefits fell by more-than-anticipated to 192,000. The decrease from the prior week’s upwardly revised total of 212,000 may illustrate the lingering resilience of the U.S. labor market, as well as the relative ease with which those who find themselves out of work are finding new jobs.

The numbers are likely to factor into the Federal Reserve‘s policy decisions later this month, with the central bank keen to corral inflation but also cognizant of a possible crisis in the U.S. banking sector.


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