U.S. Philly Fed’s manufacturing index rises in July

The Philadelphia Fed’s manufacturing index rose in July to 25.7, from 19.9 in the prior month. The rebound came against Barclays’ expectations of a largely sideways move. New orders recovered in July and drove the rise in the overall index. There has been much volatility in new orders in recent months: an outsized rise in May was followed by a sharp fall in June.

But, smoothing over those fluctuations, new orders in the Philly area. Prices paid and received both rose, although the rate of rise was considerably faster for prices paid, implying that manufacturers are struggling to pass on the rise in input costs to their buyers.

Employment dropped sharply, to 16.88 from 30.4, after making stable gains since January of 2018. Shipments eased, with the index falling 4 points. The forward-looking index of general business activity six months ahead moderated, driven by lower expectations of new orders and employment. Moreover, fewer companies expect rises in capital expenditures relative to June, and fewer companies also foresee a rise in final output prices.

Overall, a positive signal from the recovery in the headline measure of business activity and continue to view factory activity in the region as on a stable footing.

“However, we think uncertainty regarding trade policy will likely weigh on the forward-looking indexes in the coming months”, said Barclays in a research report.

At 16:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 163.3. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex