Manufacturing is soaring in parts of the Northeast and Philadelphia area, according to a July Philadelphia Federal Reserve Index report (link opens as PDF) released today.
The "Philly Fed" publishes the results of a monthly survey asking regional (eastern Pennsylvania, southern New Jersey, and Delaware) manufacturing stakeholders whether certain components of manufacturing have experienced growth (positive number), or contraction (negative number). Investors watch regional manufacturing reports as a possible signal of larger economic upswings or downturns.
After clocking in at 17.8 for June, analysts had expected a slight decline in the business activity index to 16.9. Instead, actual results came in well above June levels, at 23.9, the index's highest reading since March 2011. This is the fifth-straight month of above-zero readings, hinting at strong and steady growth in the Northeast and Philadelphia area manufacturing sector.
Dissecting the index into components, July's jump was in all the right places. The important new orders component more than doubled, from 16.8 to 34.2, as did shipments, from 15.5 to a similar 34.2 reading. But even as goods shipped out, firms expanded supplies, with the inventories component heading from -6.7 into growth territory at 4.8.
Looking ahead, July's optimism seems as if it will last. The survey's future conditions (six months from now) index registered a 6.1 point increase to 58.1.