Philly Fed: Sharp Drop As New Orders Plunge

Bottom Line: The Philadelphia Fed's index of manufacturing activity fell for the third month in a row in October, as new orders dropped sharply, declining for the sixth month. Shipments still rose slightly as manufacturers worked off backlogs. However, the report continued to suggest weakness going forward as new orders fell and order backlogs declined. Remarkably, manufacturers continued to report net hiring as they continue to struggle to find skilled labor and fear they won't have enough in the next cyclical rebound. Overall, the Philly Fed survey confirms trends we've been seeing across the country for several months. While current production has decelerated but is holding up as manufacturers work off backlogs, most indications suggest a sharp slowdown is coming.The Philadelphia Fed Manufacturing Index FELL -10.7 points to -19.4, BELOW the 3-Month average of -12.67, BELOW the 6-Month average of -7.9, and -58.4 BELOW the year-ago level.  On an ISM-weighted basis, the index FELL -4.7 points to -3.7, BELOW the 3-Month average of -2.2, BELOW the 6-Month average of 1.18, and -38.1 BELOW the year-ago level.