US Philly Fed index rockets in May, hiring strengthens

Perhaps the most closely-followed lead indicator for factory sector activity in the States jumped past forecasts in May as new orders rocketed.

Subindices linked to hiring and the length of workers' shifts also registered solid increases, especially the latter.

The Federal Reserve bank of Philadelphia's manufacturing sector headline gauge rose from a reading of 23.2 for April to 34.4 in May, easily surpassing analysts' projections for a dip to 21.7.

Particularly noteworthy was the improvement seen in the sub-index for new orders, which surged from last month's reading of 18.4 to 40.6 - its highest since March 1973.

"Monday's Empire State index hinted strongly that the Philly index would beat expectations, but the headline is significantly strongly than the Empire State suggested. The details are remarkable," Pantheon Macroeconomics's Ian Shepherdson said in a research note sent to clients.

Prices pressures on the other hand were apparently mixed.

So while the corresponding subindex for the 'prices paid' by companies slipped from 56.4 to 52.6, that linked to the 'prices received' by firms rose by 6.6 points to 36.4 - the loftiest reading since February 1989.

In parallel however, the sub-index tracking levels of staffing at firms improved from 27.1 to 34.6, while that referencng the length of the average employee workweek leapt from 21.6 to 34.4.

Nonetheless, Shepherdson added: "We're sticking to our view that the underlying trend in the manufacturing surveys has levelled-off, but we aren't yet looking for a clear downtrend and April's ISM was on the soft side."