Growth in Philadelphia-area manufacturing activity unexpectedly reaccelerated in the month of September, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.
The Philly Fed said its diffusion index for current activity jumped to 30.7 in September from 19.4 in August, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to edge down to 19.0.
The unexpected rebound by the headline index was partly due to a notable increase by the shipments index, which surged up to 29.9 in September from 18.9 in August.
On the other hand, the new orders index slid to 15.9 in September from 22.8 in August and the number of employees index fell to 26.3 from 32.6.
The report showed the prices paid index also dropped to 67.3 in September from 71.2 in August, while the prices received index edged down to 52.9 from 53.9.
The Philly Fed said firms remained generally optimistic about growth over the next six months, although the diffusion index for future general activity slumped to 20.0 in September from 33.7 in August.
“Looking ahead, regional manufacturers’ spirits will be lifted by solid domestic and overseas demand, though supply chain disruptions will limit their ability to fulfill orders, said Oren Klachkin, Lead U.S. Economist at Oxford Economics.
He added, “We expect the supply side headwinds to drag on factory activity well into 2022.”
On Wednesday, the New York Fed released a separate report showing growth in New York manufacturing activity also rebounded unexpectedly in September.
The New York Fed said its general business conditions index surged up to 34.3 in September after plunging to 18.3 in August.
The substantial rebound in the pace of regional manufacturing growth came as a surprise to economists, who had expected the index to edge down to 18.0.