Philly Fed index beats expectations

Manufacturing conditions in the Philadelphia region unexpectedly improved in September, according to a survey from the Federal Reserve Bank of Philadelphia.

The diffusion index for current activity rose 11 points to 12.8, which was well ahead of economists’ expectations for a reading of 1.0.

The new orders index rose from -7.2 to 1.4, but the current shipments index declined from 8.4 in August to -8.8.

Meanwhile, the inventories index fell to -26.2 from -9.2.

Overall, firms remained optimistic about business conditions over the next six months and were more upbeat about prospects for employment. The diffusion index for future activity declined from 45.8 in August to 37.5 in September but remained slightly above its average reading over the past 12 months.

Pantheon Macroeconomics said: "The jump in the headline Philly index looks comforting, but the sub-indexes are weaker than in July, with a partial rebound in new orders offset by sharp declines in inventories and shipments."