The Federal Reserve Bank of Philadelphia released a report on Thursday showing the pace of growth in regional manufacturing activity slowed by much more than anticipated in the month of December.

The report said the Philly Fed Index tumbled to 11.1 in December after falling to 26.3 in November. While a positive reading still indicates growth in regional manufacturing activity, economists had expected the index to show a much more modest drop to 20.0.

The bigger than expected decrease by the headline index partly reflected a substantial slowdown in the pace of growth in new orders, as the new orders index plunged to 2.3 in December from 37.9 in November.

The number of employees index also tumbled to 8.5 in December from 27.2 in November, while the shipments index slumped to 14.4 from 24.9.

The report also showed a slowdown in the pace of price growth, as the prices paid index slid to 27.1 in December from 38.9 in November and the prices received index fell to 18.0 from 25.4.

Looking ahead, the Philly Fed said changes in future indexes were mixed this month but suggest that overall growth is expected to continue over the next six months.

The report said the diffusion index for general activity over the next six months dropped to 39.2 in December from 44.3 in November.

“Manufacturing will maintain an upward trajectory, but softening demand and the resurging pandemic will constrain the gains,” said Oren Klachkin, Lead US Economist at Oxford Economics.

He added, “Another round of fiscal stimulus will inject some strength into manufacturing, but the package likely won’t significantly lift activity.”

On Tuesday, the New York Fed released a separate report showing regional manufacturing activity edged slightly higher in the month of December.

The New York Fed said its general business conditions index slipped to 4.9 in December from 6.3 in November, but a positive reading still indicates growth. Economist had expected the index to dip to 5.8.


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