District Manufacturing Activity Eased in July -- Philly Fed

Manufacturing activity in the Philadelphia area lost some steam in July compared with the previous month, according to data from a survey released Thursday by the Federal Reserve Bank of Philadelphia.

The index for current general activity fell to 21.9 in July from 30.7 in June, below the 27.0 reading forecast by economists' polled by The Wall Street Journal.

The survey polls manufacturers in the Third Federal Reserve District--which covers eastern Pennsylvania, southern New Jersey and Delaware--about the direction of change in overall business activity at their plants on a monthly basis. Any reading above zero indicates expansion.

The index signals that overall manufacturing activity in the region continued to expand robustly, although easing from March and April's multi-decade high levels. Factories across the U.S. are struggling to keep up with demand due to widespread input and labor shortages.

In July, 33% of firms in the Philly Fed's district reported increases in overall activity, while 11% reported decreases compared with June.

The survey's indicators for new orders and shipments declined in July, but remained at high levels.

The new orders index decreased five points to 17, while the shipments index fell three points to 24.6.

The employment index dropped slightly to 29.2 from 30.7 the previous month, suggesting that firms continued to add to their payrolls in July, the report said. More than 38% of the respondents reported employment increases and 9% declared decreases.

Respondents in the survey continued to report price pressures, but both price indexes declined this month. The prices paid diffusion index decrease 11 points to 69.7 in July from June's record-high, while the prices received index dropped three points to 46.8.

The survey's indicators for future general activity signal that firms remain optimistic in the near-term, albeit at a lower levels than in June.

The diffusion index for general activity over the next six months fell 21 points to 48.6. The future new orders and shipments indexes also declined, while the future employment index rose three points to 56.6, with nearly 63% of the firms polled expecting to increase payrolls in the near future.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

  (END) Dow Jones Newswires
  07-15-21 0910ET
  Copyright (c) 2021 Dow Jones & Company, Inc.

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