Philly Fed Index Turns Positive For First Time In Almost A Year

Manufacturing activity in the mid-Atlantic region is showing some signs of stabilizing, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of activity in the sector unexpectedly climbing into positive territory in August.

The Philly Fed said its index of current activity rose to 4.2 in August from a negative 7.5 in July, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase to a negative 2.0.

With the bigger than expected increase, the index rose above zero for the first time since September of 2008 and reached its highest level since November of 2007.

However, Peter Boockvar, equity strategist for Miller Tabak, noted, “The data measures the direction of improvement, not the degree. So, don’t extrapolate that we are at November ‘07 output levels.”

A turnaround in new orders contributed to the improvement in the sector, with the new orders index rising to 4.2 in August from a negative 2.2 in July. The shipments index also jumped to 0.6 from a negative 9.5 in the previous month.

The report also showed that the inventories index rose to 0.3 in August from a negative 15.4 in July. This marks the first positive reading for the inventories index since September of 2007.