The numbers: The Philadelphia Federal Reserve said Thursday its gauge of regional business activity remained in contractionary territory for the second straight month in October.
The index improved 5 points but remained at negative 9.0. This is the index’s 15th negative reading in the past 17 months.
Economists polled by the Wall Street Journal expected a negative 6.8 reading in October.
Readings below zero indicate deteriorating conditions.
Key details: The subcomponents of the index were stronger than the headline.
The barometer on new orders increased 14.6 points to reach 4.4 in October.
The shipments index rose 14 points to 10.8. The measure on six-month business outlook edged down to 9.2 from 11.1 in September.
The employment index turned positive and prices increased.
In a special question, more firms reported they anticipate lower capital spending next year than those that expected an increase.
Big picture: Some economists are seeing signs of a bottom in the manufacturing sector.
They point to the national ISM factory activity index, which contracted in September for the eleventh straight month but improved to 49%, the highest level in almost a year.
Together the Philadelphia Fed index and the Empire State index from New York often offer timely reads of the manufacturing sector, but in recent months, the surveys have been volatile.
Earlier this week, the Empire State index showed manufacturing activity also moved down into contractionary territory. The general business conditions index slipped 6.5 points to negative 4.6 in October.
What are they saying? Rubeela Farooqi, chief U.S economist at High Frequency Economics, said she saw downside and upside risks for the sector. Softer demand and higher interest rates were barriers for growth while re-shoring of supply chains, infrastructure projects and a stabilization of demand could provide support going forward.
Market reaction: U.S. stocks
were set for a mixed open on Thursday while the 10-year Treasury note yield
rose close to 5% in early morning trading.
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