Philly Fed District's Factory Activity Gained Momentum in January

By Xavier Fontdegloria

Factory activity in the Philadelphia area picked up pace in January compared with the previous month as demand for goods strengthened, according to a survey from the Federal Reserve Bank of Philadelphia released Thursday.

The index for current general activity of the Business Outlook Survey rose to 23.2 in January from 15.4 in December, beating the 18.5 consensus forecast from economists polled by The Wall Street Journal.

The survey polls manufacturing firms in the Third Federal Reserve District--which covers eastern Pennsylvania, southern New Jersey and Delaware--about the direction of change in overall business activity at their plants. Any reading above zero indicates expansion.

The increase of the index is at odds with data from the Empire State Manufacturing Survey in New York published Tuesday, which showed that manufacturing activity stalled in the region in January for the first time in 18 months.

In the Philly Fed's district, almost 31% of firms reported increases in overall activity in January, while 7% reported decreases compared with the previous month.

Demand for goods gained momentum, according to the survey. The new orders index increased to 17.9 from 13.7 the previous month, and the shipments index rose to 20.8 from 15.3, pointing to a steeper growth rate for both new orders and shipments.

The employment index fell to 26.1 from 33.9, signaling that firms in the area continued to hire workers, albeit at a slower pace than the previous month. The majority of responding firms, around 63%, reported steady employment levels, the report said.

The survey added further evidence that supply-chain pressures could be easing at the margin. The delivery times index fell to 25.2 from 31.4, suggesting still slowing delivery times but less so than in December.

The indicators for prices paid and prices received remained elevated and suggested widespread increased in prices. The prices paid index increased to 72.5 from 66.1, while the prices received index fell to 46.4 from 50.4 a month earlier.

The survey's future indexes signaled that firms' assessment about business conditions over the next six months improved. The index for future general activity rose to 28.7 from 19.0, recovering its decline in December, with 44% of respondents expecting increases in future activity. The future new orders and shipments indexes also rose, while the employment index fell, the Philly Fed said.

Write to Xavier Fontdegloria at [e-mail]

(END) Dow Jones Newswires

01-20-22 0915ET