US mid-Atlantic makes sky rockets to 16-month high by Reuters

Estimated read time 2 min read

By Safia Riedel

(Reuters) – Manufacturing activity in the U.S. Mid-Atlantic region grew at its strongest pace since April 2022 in August, according to a report released on Thursday, with new orders rising amid strong consumer demand.

The Philadelphia Fed’s monthly survey of commodity producers released Thursday showed that the general index of business activity jumped to 12.0 from -13.5 in July, up by the largest monthly margin since April 2021. The jump from negative to positive revealed that factories entered a period of expansion after a year of Continuing contraction, as a wave of consumer spending pushed the new orders index to 32 in August from minus 16 in July.

The increase in manufacturing activity in the region largely exceeded the median forecast of economists polled by Reuters, who expected the index to remain in contractionary territory at -10.

Thursday’s report followed a large increase in retail sales in August. Flexible spending adds to the growing body of evidence that the economy can avoid a recession, but could be a source of concern for the Federal Reserve, which has tried to tame consumer demand by raising interest rates by 525 basis points since March 2022.

Businesses across the region weren’t so confident these trends would continue, however, with the six-month business expectation dropping more than 25 points to 3.9 in August from a nearly two-year high of 29.2 in July – the biggest monthly drop for that. . Index since 2008.

The deteriorating outlook combined with a modest decline in profit margins in August, as companies reported a decline in prices sent the index down 9 points, to 14.1. Producers expected prices to continue to cool throughout the year, and forecast a projected increase of 4.0% over the next twelve months, down from a reported increase of 5% over the past year. At the same time, prices paid for inputs have risen slightly, with nearly 30% of manufacturers paying more to produce goods, and two-thirds paying the same amount as they did last month.

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