Factory activity in the U.S. mid-Atlantic region slowed sharply for the third consecutive month to its lowest growth since December after hitting its highest pace in nearly half a century earlier this spring, a survey showed on Thursday.
The Philadelphia Federal Reserve Bank said its business activity index fell to 21.9 from 30.7 in June. That was well below economists’ expectations for a reading of 28.0, according to a Reuters poll.
Any reading above zero indicates expansion in the region’s manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.
It is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management, next due out August 2.
Even though U.S. factory orders rebounded sharply in May, factories are still struggling to keep up with demand as the COVID-19 pandemic shattered supply chains and rattled the global shipping industry. Nationwide, manufacturing output at U.S. factories fell in June.
In March, the Philly Fed’s factory activity gauge hit its highest level since 1973.
The Philly Fed employment index decreased to 29.2 from 30.7 in June.
Additionally, the price paid index fell sharply to 69.7 in July from 80.7 in the month prior, after reaching a 42-year high in June. While this marked the index’s first decline in three months, it still remains at a historically elevated level.
In addition, the bank’s six-month outlook index, a gauge of future business activity, tumbled to 48.6 in July from 69.2 the previous month, its lowest reading since February. It was also the largest drop in a year.