The gauge signals contraction in regional manufacturing activity, defying expectations of a sharp rebound to 18.0.
The Philadelphia Fed’s manufacturing index dropped to -0.4 in May, missing economists’ forecasts of a rise to 18.0 and marking a sharp decline from April’s 26.7 reading. The index, which tracks activity in eastern Pennsylvania, southern New Jersey, and Delaware, indicates contraction when below zero.
April’s print reflected robust expansion, with new orders and shipments surging. Consensus estimates anticipated continued strength amid easing supply chain pressures and resilient demand. The unexpected contraction raises concerns about the sector’s momentum.
Details on subcomponents, including new orders, shipments, and employment, were not fully disclosed but suggest broad weakness. Six-month forward indicators also softened, pointing to cautious optimism among manufacturers.