No Surprise, Philly Manufacturing Shrank

Manufacturing in the Philadelphia region contracted in August for a fourth consecutive month as orders and employment declined.

The Federal Reserve Bank of Philadelphia’s general economic index improved to minus 7.1 in August from minus 12.9 the previous month. Economists forecast the gauge would climb to minus 5, according to the median estimate in a Bloomberg survey. A reading of zero is the dividing point between contraction and expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Today’s report is in line with figures from The Federal Reserve Bank of New York earlier this week that showed manufacturing contracting for the first time in 10 months. Slowing demand from Europe to China and cutbacks in business investment in new equipment may be hurting U.S. factories even as American household spending holds up.

“The pace of growth is still unimpressive overall,” said Sean Incremona, senior economist at 4Cast Inc. in New York before the report. “Externally there are some headwinds with pretty soft global conditions. We think that business investments are pretty tame in 2012 so that is restricting manufacturing from a domestic standpoint as well.”

Estimates in the Bloomberg survey from 56 economists surveyed ranged from minus 17.9 to 5.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell