Philly Fed slightly ahead of estimates but still in negative territory

Manufacturing conditions in the Philadelphia region contracted modestly in January, according to the latest report from the Federal Reserve Bank of Philadelphia.

The diffusion index for current activity rose from a revised reading of -10.2 in December to -3.5, slightly ahead of consensus estimates for a print of -4 but it still marked a fifth consecutive month in negative territory.

Meanwhile, the index for current new orders also remained negative, but improved by 10 points to -1.4.

A gauge of current shipments increased 12 points as firms reported a rise at the start of the year, marking its first positive reading in four months.

"The Philly numbers are not good, but they are much less bad than the Empire State data and their own recent history," said Pantheon Macroeconomics.

"These numbers are too volatile to be definitive, but they suggest that the downward pressure on the manufacturing sector is no longer intensifying."