Philadelphia Fed June Business Index Rises

Mid-Atlantic manufacturers reported better business conditions this month, according to a survey released Thursday by the Federal Reserve Bank of Philadelphia. Optimism jumped as did the costs of inputs.

The Philadelphia Fed's index of general business activity covering the regional factory sector unexpectedly increased to 17.8 in June from 15.4 in May.

Economists surveyed by the Wall Street Journal expected the latest index to slow to 13.3. Readings under zero denote contraction, and above-zero readings denote expansion.

On Monday, the New York Fed said manufacturing in its state remains quite strong this month, with new orders at a four-year high.

Taken together, the reports suggest factory output in the Northeast continues to grow this month. A rebound in manufacturing output nationwide would help economic growth this quarter after the economy contracted in the first quarter. Earlier Thursday, the Labor Department said jobless claims fell 6,000 to 312,000 last week.

Within the Philadelphia Fed survey, the subindexes generally are improving this month.

The new orders index rose to 16.8 from 10.5 in May. The shipments index edged up to 15.5 from 14.2.

The employees index advanced to 11.9 in June from 7.8 last month. The workweek index jumped to 7.3 from 2.9.

Philadelphia area manufacturers report vastly higher cost pressures. The prices-paid index jumped to 35.0 from 23.0 in May which was more than double April's 11.3 reading. The prices-received index slowed to 14.1 after it jumped to 17.0 from 4.3 in April.

Philadelphia manufacturers are much more optimistic about the next six months.

The general business expectations index jumped to 52.0 in June from 37.4 in May. It was the highest reading since October 2013.

The employment index increased to 31.4 from 24.1 last month.

Write to Kathleen Madigan at [e-mail]

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