Philly Fed Index Tops Forecasts
Diane Hess
07/17/03 - 04:20 PM EDT
The Mid-Atlantic manufacturing sector expanded for the second month in a row in July, according to the latest regional survey from the Federal Reserve Bank of Philadelphia.
The Philly Fed index rose to 8.3 in July from 4.0 in June, topping expectations for a reading of 7.5.
"Regional manufacturing showed signs of improvement again this month," the Fed said. "Most of the survey's indexes of current performance improved and suggest a slight expansion of business."
A subindex for new orders increased from -0.5 in June to 10.4, its first positive reading in five months. A subindex for shipments had its first positive reading in four months, rising from -1.2 in June to 9.1. More firms reported increases in unfilled orders than declines, for the second month in a row. And subindices for employment and the average workweek advanced in July.
Robust Outlook
Firms' expectations for future performance were also better. According to the survey, 61% of companies expect an increase in activity over the next six months. Only 4% are predicting declines.
"All in all, this is a decent report," said John Lonski, an economist at Moody's Investor Service. "It is in line with other July indications we have gotten of an improved economy."
Other economists were more cautious about prospects for a near-term recovery, however.
"The data we have had recently is still mixed," said Josh Feinman, an economist at Deutsche Asset Management. "Reports are not conclusively showing the economy to be picking up. But they have been a little bit firmer. There have been a few glimmers. Thursday's data is continuation of that pattern."
Initial jobless claims for the week ended July 12 fell to 412,000 from a revised 441,000 in the prior week. While the drop is good news, claims above 400,000 are still consistent with labor market strain.
Elsewhere, home starts rose 3.7% in June to an annualized pace of 1.803 million. The housing market has been an area of strength amid the weak economy, helped by historically low mortgage rates.
