(Reuters) – Manufacturers in the U.S. Northeast grew more optimistic about the near-term business outlook this month even as current conditions remained mixed across the region.
Monthly surveys of goods producers from the Federal Reserve banks of Philadelphia and New York on Thursday both showed the six-month outlook at 15-month highs. Manufacturers in both districts, which cover New York, New Jersey, Delaware and most of Pennsylvania, saw new orders and shipments improving in the near term and a further slackening of price pressures.
It was the second straight monthly improvement in the outlook reported by the New York Fed, “suggesting firms have become more optimistic that conditions will improve over the next six months,” the bank said in a statement. “New orders and shipments are expected to increase modestly, and employment is expected to expand.”
For the Philadelphia Fed, its outlook index rose above the zero line demarking expected activity growth from contraction for the first time since February. In both cases, the indexes were the highest since March 2022.
Broader national surveys of manufacturing have shown the sector in contraction for more than half a year as goods demand softened in the face of high inflation and the Fed’s efforts to quash it with hefty interest rate increases.
The Fed on Wednesday opted to skip lifting interest rates for the first time since early 2022 to take more time to assess the effects of the aggressive policy-tightening measures taken so far. Central bank officials still see more rate hikes needed later this year, however.
Current conditions in the two districts were mixed. The Philadelphia Fed’s main gauge of activity showed contraction in that region for a 10th straight month, while the New York Fed’s headline index surged by the most in three years back into positive territory.
Factories in both regional surveys reported input price pressures – a key indicator of inflation – were softening now and were expected to continue doing so. Prices paid indexes for both were at or near their lowest in about three years.
(Reporting By Dan Burns; Editing by Andrea Ricci)
