The Philly Fed was in line with estimates at 21.4, up from 20.2 in April and in contrast to the sharp drop seen in the NY manufacturing survey. But, the components showed softness as New Orders fell to 6.1 from 13.9, Backlogs fell to -3.0 from -.9 and the Employment component fell to 3.2 from 7.3 to the lowest since Nov ’09. Inventories fell to -7.9 from +2. Prices Paid fell 7 pts but is just back in line with the 6 mo average and Prices Received rose 2.5 pts to a 3 mo high. Shipments, which follow orders, were the positive, rising 10 pts but with the drop in New Orders, it won’t be sustained at the same level. The 6 mo outlook fell 7 pts to 37, a 3 month low but the hiring outlook rose to the most since May ’04. Manufacturing in the region continues to expand and is expected to for the next 6 months but “many firms pointed to uncertainty about product demand and the cost of hiring workers, as well as low capacity utilization, as reasons for not increasing employment.”
