Philly Fed index soars past forecasts in June

A key gauge of manufacturing sector conditions in the US mid-Atlantic region shot back in June, soundly beating economists' forecasts.

The Federal Reserve bank of Philadelphia's factory sector index surged from May's level of -43.1 to 27.5, easily surpassing the median consensus forecast for an improvement to -27.4.

The key sub-index tracking new orders performed a similar feat, rising from -25.7 to 16.7, alongside an improvement in the sub-index for shipments from -30.3 to 25.3.

Prices paid by firms also picked up, with a sub-index linked to them increasing from 3.2 to 11.1, while another tied to the prices received by companies going from -3.1 to 11.0.

Sub-indices referencing the jobs market however lagged, although that for hiring did improve from -15.3 to -4.3, while another that measures the length of the average workweek edged up from -7.1 to -6.5.

"The Philly Fed points to a big rebound in the national ISM manufacturing index, but remember that diffusion indexes tend to overstate the improvement in the early stage even of normal cyclical upswings; that tendency will be greatly magnified this time around," said Pantheon Macroeconomics's Ian Shepherdson.