Philly Fed: Another Sharp Drop, New Orders Decline

Bottom Line: The Philadelphia Fed's index of manufacturing activity fell more than expected in June. This follows a sharp decline in May and a decline in the neighboring Empire manufacturing survey reported earlier this week. The index fell into negative territory, suggesting contracting activity. New Orders saw a record decline. That said, the survey was still in positive territory on an ISM-weighted basis. Still, the shift in trend is remarkable and concerning, especially as it confirms the relatively weak Empire survey. Shipments continued to grow but decelerated sharply. On the plus side, prices paid fell sharply. Overall, the tremendous uncertainty that manufacturers have managed for over a year is finally taking its toll as higher interest rates and inflation sap demand. The future activity index hit its lowest level since the 2008/9 crisis.

The Philadelphia Fed Manufacturing Index FELL 15 points to 2.6, BELOW the 3-Month average of 15.87, BELOW the 6-Month average of 17.03 and 28.9 BELOW the year-ago level.