Manufacturing in the Philadelphia Region Unexpectedly Shrinks

Manufacturing in the Philadelphia region unexpectedly contracted in February for a second month.

The Federal Reserve Bank of Philadelphia’s general economic index dropped to minus 12.5, the lowest reading since June, from minus 5.8 in January. Readings lower than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware. The median forecast of 58 economists surveyed by Bloomberg projected an increase to 1.

The reading follows New York Fed data released last week that showed factory activity rebounded after six months of contraction, raising prospects that factories could contribute to expansion this year. At the same time, unresolved fiscal policy negotiations and the January increase in payroll taxes may convince companies to hold the line on stockpiles, trimming orders to manufacturers.

“There are some conflicting signals here and there, but overall the sector should improve,” Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, said before the report. “World growth should pick up marginally this year, and that should be supportive of manufacturing in the U.S.”

Bloomberg survey estimates ranged from minus 4 to 10.

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Enlarge image

Manufacturing in the Philadelphia Region Unexpectedly Shrinks

Bradley C. Bower/Bloomberg

A welder works on the deck component of a petroleum tanker at the Aker Philadelphia Shipyard, the city's largest manufacturing business.

A welder works on the deck component of a petroleum tanker at the Aker Philadelphia Shipyard, the city's largest manufacturing business. Photographer: Bradley C. Bower/Bloomberg

1:55

Feb. 21 (Bloomberg) -- U.S. Jobless claims increased by 20,000 to 362,000 in the week ended Feb. 16, the Labor Department reported today in Washington. Separately, the cost of living in the U.S. was little changed in January for a second month as a drop in energy costs made up for gains in other goods and services. Deirdre Bolton and Michael McKee report on Bloomberg Television's "In the Loop." (Source: Bloomberg)

5:17

Feb. 20 (Bloomberg) -- David Stevens, chief executive officer of the Mortgage Bankers Association, talks about the outlook for the U.S. housing market and economy. Stevens speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)