Business conditions steady in mid-Atlantic

Though still in decline, economic activity in the Philadelphia region shows improvement in September on top of a better long-term outlook

As the manufacturing sector continues to slow nationwide, news from the mid-Atlantic region offered a sign of hope on Thursday. The Philadelphia Federal Reserve Bank’s Business Outlook Survey revealed nearly flat business activity in the region for September following several months of decline. The survey’s general activity and new orders indexes both improved compared to August, edging closer to zero and indicating that conditions have steadied in the region.

The survey’s business activity index registered -1.9, a five-point increase over August. Although this is the fifth straight month of decline, it marks the third straight month that the index has edged closer to zero. The survey’s new orders index improved as well, rising seven points compared to August—to a reading of 1—and marking its first positive reading in five months.

The Philadelphia Fed also revealed improved optimism among business leaders, as the survey’s future indicators showed notable improvement. The six-month outlook for general business activity rose to 41.2 compared to a reading of 12.5 in August and the indexes for future new orders and shipments each rose 31 points.

On the down side, current shipments worsened and labor market conditions failed to improve during the month. Shipments fell 10 points to -21.2 and the employment index was little changed from July and August, at -7.3.

The news came on the heels of a negative report from the New York Fed earlier in the month. The Empire State Manufacturing Index revealed weakening economic conditions in the New York/New Jersey area in September, as its monthly business activity index slipped five points to -10.4. This was its second straight negative reading and its lowest in nearly two years. The new orders index fell as well, sliding nine points to -14—its third consecutive negative reading and its lowest in nearly two years as well.

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