Manufacturing activity in the Philadelphia region slowed sharply in September, with new orders and shipments suggesting no growth.
The Federal Reserve Bank of Philadelphia said Thursday that firms surveyed were also significantly less optimistic about future activity.
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, dropped from 18.5 in August to -0.4 this month.
"Indicators from our Business Outlook Survey reflect little or no growth in the region’s manufacturing sector this month," said Philly Fed Senior Economic Analyst Mike Trebing. "The indexes for general business activity, shipments, and new orders fell from their readings in August."
The index for current employment did show improvement, increasing three points from its reading in August. Twenty percent of the firms reported increases in employment; 10 percent reported reductions. More firms reported increases in the workweek (19 percent) than reported decreases (14 percent), but the average workweek index fell seven points.
"A significant percentage of the firms continue to report rising prices for inputs, but our index for current prices paid suggests that price increases were less widespread this month," Trebing said. "The index for prices received for our respondents’ own products was somewhat higher than last month, however. The executives who responded to the survey this month were significantly less optimistic about future growth in manufacturing."
In a special question this month, firms were asked about planned capital spending for the upcoming year. In four out of five categories of capital spending, a greater percentage of firms indicated that expenditures would be higher next year than indicated they would be lower. For investment in structures, more firms said spending would be lower (36 percent) than said it would be higher (10 percent).
The survey gathers information on the manufacturing industry in the Third Federal Reserve District covering eastern Pennsylvania, southern New Jersey, and Delaware. Participation in the survey is limited to manufacturing firms with plants in the area with more than 100 employees.