The May Philly Fed survey came in at -22.6, 4.6 pts weaker than expected but is a slight improvement from April’s reading of -24.4 and is the 3th month in a row of less negative #’s. New Orders weakened a touch to -25.9 from -24.3 but Backlogs rose a touch to the highest since Sept. Actual shipments, which follows new orders, rose to -19 from -35.7 in April which was a record low. Employment rose 18 pts to -26.8 to the best level since Nov. After the very steep drop in inventories in March and April, inventories remained negative but the least negative since Nov. Both Prices Paid and Prices Received bounced off last months record low in both. The key take away is the continued belief that less bad will soon turn to good as the 6 month outlook for General Business Activity rose to 47.5 from 36.2, the highest since Nov ’04.
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