A reading on Philadelphia-area manufacturing activity unexpectedly showed a substantial acceleration in the pace of growth in the month of February, the Federal Reserve Bank of Philadelphia revealed in a report on Thursday.
The Philly Fed said its index for current manufacturing activity in the region soared to 43.3 in February from 23.6 in January, with a positive reading indicating growth. The jump surprised economists, who had expected the index to dip to 19.3.
With the sharp increase during the month, the Philly Fed Index skyrocketed to its highest level since January of 1984.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The Philly Fed index is now at a level that, based on the historical relationship, would point to GDP growth of slightly more than 6%."
"Before we get too carried away, it's important to stress that this is a regional indicator that can be very volatile from month to month," he added.
The spike by the headline index was partly due to notably faster growth in new orders, as the new orders index jumped to 38.0 in February from 26.0 in January. The shipments index also climbed to 28.6 from 20.5.
On the other hand, the employment index edged down to 11.1 in February from 12.8 in January, indicating a modest slowdown in the pace of job growth.
The report also said the prices paid index dipped to 29.9 in February from 32.5 in January, while the prices received index tumbled to 10.6 from 26.8.
Looking ahead, the Philly Fed said the future indexes for growth moderated from last month but continued to reflect a high degree of optimism.
The diffusion index for future general activity fell to 53.5 in February after reaching a two-year high of 56.6 in February.
On Wednesday, the New York Federal Reserve released a separate report showing a significant acceleration in the pace of growth in regional manufacturing activity in February.
The New York Fed said its general business conditions index jumped to 18.7 in February from 6.5 in January, with a positive reading indicating growth in manufacturing activity. Economists had expected the index to edge up to 7.5.
With the much bigger than expected increase, the index rose to its highest level since reaching 30.2 in September of 2014.
by RTT Staff Writer
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