Mid-Atlantic Factory Activity Shrinks Unexpectedly in August

Key Findings

• The number of employees index plunged to a negative 57 in August from a positive 152 in July.
• Manufacturing activity in the region contracted overall, according to firms responding to the August survey.
• New orders decreased, and firms reported a decline in unfilled orders.
• The prices paid index rose to 54.4 from 52.4, indicating continued inflationary pressures.

Details of the Report

A report released by the Federal Reserve Bank of Philadelphia on Thursday showed that factory activity in the US mid-Atlantic region unexpectedly shrank in August.

The headline index measuring manufacturing activity in the region fell to a negative 6.2 in August from a positive 17.6 in July, indicating a contraction in activity.

The number of employees index also dove to a negative 57 in August from a positive 152 in July, suggesting a sharp decrease in hiring activity.

New orders decreased, and firms reported a decline in unfilled orders, indicating a slowdown in demand.

Despite the overall contraction in activity, the prices paid index rose to 54.4 from 52.4, suggesting continued inflationary pressures.

Commentary

"The survey suggests that manufacturing activity in the region contracted in August, reflecting a decrease in new orders and a decline in employment," said Philadelphia Fed President Patrick Harker.

"The report is a reminder that the manufacturing sector is not immune to the economic headwinds facing the nation, including rising interest rates, inflation, and supply chain disruptions," said economist Gus Faucher of PNC Financial Services Group.

The unexpected contraction in manufacturing activity in the mid-Atlantic region is a cause for concern, as it suggests that the economic slowdown may be more widespread than previously thought.