Philly Fed Index Plunges Much More Than Expected In May

(RTTNews) - A report released by the Federal Reserve Bank of Philadelphia on Thursday showed regional manufacturing activity unexpectedly weakened in the month of May.

The Philly Fed said its diffusion index for current general activity plummeted to a negative 0.4 in May from a positive 26.7 in April, with a negative reading indicating contraction. Economists had expected the index to pull back to a positive 15.0.

The steep drop by the headline index partly reflected a significant downturn in new orders, as the new orders index dove to a negative 1.7 in May from a positive 33.0 in April.

The shipments index also plunged to a positive 4.9 in May from a positive 34.0 in April, although the positive reading still indicates growth.

The report said the number of employees index rose to a negative 2.8 in May from a negative 5.1 in April, but the negative reading still suggests overall declines in employment.

On the inflation front, the Philly Fed said both price indexes declined this month but remained above their long-run non-recession averages.

The prices paid index tumbled to 47.9 in May from 59.3 in April, while the prices received index slumped to 26.3 in May from 33.5 in April.

Meanwhile, the Philly Fed said firms continue to expect overall growth over the next six months, with the diffusion index for future general activity surging to 53.2 in May from 40.8 in April and reaching its highest reading since June 2021.