Philly Fed: Continued Contraction

Bottom Line: The Philadelphia Fed's Manufacturing survey showed a smaller-than-expected contraction in activity. New orders and shipments continued to contract but at a slower pace than earlier this year. Prices paid remained firm, edging modestly higher. Employment fell for the second month in the last three, a notable trend given how strong employment in manufacturing has remained despite the slowdown in activity. Overall, manufacturing remains weak and was continuing to decline in the first half of May, but this report offered hope that a bottoming is in sight.

The Philadelphia Fed Manufacturing Index ROSE 20.9 points to -10.4, ABOVE the 3-Month average of -21.63, ABOVE the 6-Month average of -18.63 but -13.9 BELOW the year-ago level.  On an ISM-weighted basis the index ROSE 7.9 points to -6.3, ABOVE the 3-Month average of -14.03, ABOVE the 6-Month average of -8.52 but -25.7 BELOW the year-ago level.