Philadelphia Fed’s manufacturing index surges in May, manufacturing sentiment remains positive

The Philadelphia Fed’s manufacturing index rose sharply in the month of May. The index rose from 23.2 in April to 34.4 in May. This is contrary to consensus expectations of a modes fall. The rebound was mainly due to the new orders index, which rose 22.2 points in May, hinting at a solid demand. The index on the number of employees rose 3.1 points, while the average workweek also rose.

Shipments rose 1.9 points. Prices paid dropped from April’s figure, but continue to remain at elevated levels, indicating to high input prices, while prices received rose. This implies continued prices pressures, noted Barclays in a research report.

Meanwhile, delivery times continue to be long and unfilled orders piled up. The forward-looking index of general business activity six months ahead edged lower by two points to 38.7. However, future new orders index rose three points. Almost 64 percent of the companies expect price rises for purchased inputs in the next six months, and 36 percent expect higher prices for their own manufactured goods. Overall manufacturing sentiment in the region continues to be positive, stated Barclays.

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