Philly Fed factory index tumbles in April, back in the red

Manufacturing conditions in the Philadelphia region deteriorated a lot more than expected in April, according to the latest report from the Federal Reserve Bank of Philadelphia.

The diffusion index for current activity tumbled to -1.6 from 12.4 in March, versus economists’ expectations for a slip to 8.9.

March had marked the first positive reading following six consecutive negative readings.

The index for current new orders fell to zero from 15.7, while the index for current shipments declined even more sharply, to -10.8 from 22.1.

The Federal Reserve Bank of Philadelphia said: “This month’s Manufacturing Business Outlook Survey suggests a relapse in growth of the region’s manufacturing sector. The survey’s indicators for general activity, new orders, shipments, and employment all fell notably from their readings in March.

“Despite reported weakness this month, firms’ forecasts for the next six months showed continued improvement, suggesting that the reported decline in growth is expected to be temporary.”

Pantheon Macroeconomics said: "These numbers are all so bad that we're struggling to take them seriously, given the clear improvement in other recent industrial surveys. The early Easter is the obvious likely culprit, though we find
no consistent evidence of weakness in the survey in previous Aprils when Easter fell in March. Still, this report looks like
an outlier, and we expect a clear rebound in May."