Philadelphia Fed manufacturing index drops in June

The Philadelphia Fed manufacturing index dropped in June to 27.6 from May’s 38.8, against consensus expectations of a slightly larger decline to 24.9. Even if June’s reading of 27.6 is a decline from the prior month and the index is below the high of 43.3 seen in February, the index continues to be in line with expanding manufacturing activity in the region.

Looking at the subcomponents, prices paid and new orders stayed widely stable, while shipments dropped to 28.5 from 39.1. Inventories continued to be in positive territory for the fourth straight month in a row, rebounding to 5.4 from 1.4.

While the employment index and the average workweek dropped to 16.1 and 20.5 respectively, both continued to be above their 6-month averages. Altogether, in spite of the declines from the earlier month and weak industrial production and manufacturing data for May, the Philadelphia Fed manufacturing index continues to indicate strength and optimism in the region, noted Barclays in a research report.