Manufacturing activity in US mid-Atlantic region picks up sharply in May

Factory activity in the US mid-Atlantic region accelerated sharply in May as shipments picked-up, the results of one of the most widely-followed surveys for the sector revealed.

The Philly Fed's manufacturing sector index jumped from a reading of 22.0 for April to 38.8 in May.

That easily surpassed economists' forecasts calling for a print of 18.8.

Perhaps the most important of all the subindices contained in that report, which is linked to firms' new orders, slipped from a reading of 27.4 to 25.4.

In parallel, the subindex for companies' inventory levels dropped from 17.8 to 1.4.

Companies were also facing less pricing pressures, with the corresponding subindex falling from 33.7 to 24.2.

Staffing levels also declined, with the subindex referencing the number of employees dropping from 19.9 to 17.3.

Ian Shepherdson, chief US economist at Pantheon Macroeconomics, noted how the detailes of the report were "much les impressive" than the headline sentiment index.

"Overall, it is significantly stronger than the Empire State report. The Philly report is usually a better guide to the ISM than the Empire State, but not always, and we're now very curious to see the Chicago PMI before we finalize our ISM forecast. Our core view remains that the modest manufacturing recovery will continue, but in the short term all these numbers are noisy, especially at the regional level."