Economic Report: Philly Fed manufacturing index rises to 34.4 in May — its strongest in a year

By

Senior economics reporter

A tanker truck sits on the lot of Sunoco Inc’s Philadelphia refinery.

The numbers: The Philadelphia Fed manufacturing index jumped to 34.4 in May from 23.3 in April, the regional district of the central bank said Thursday. That was well above the economist consensus for a reading of 21. It is the highest reading in a year.

Any reading above zero indicates improving conditions.

What happened: Readings for new orders soared in May, rising to 40.6 from 18.4. That is the highest reading since March 1973. The shipments index inched up to 25.8 from 23.9 in April. Price indexes suggested continued inflation pressures. The prices received index, reflecting manufacturers’ own prices, increased 7 points to a reading of 35.4, the highest since February 1989.

Big picture: The Empire State factory index, released Tuesday, rose 4.3 points to 20.1. The strength in the two surveys may support hopes of a turnaround in the national Institute for Supply Management factory survey due in two weeks. The ISM factory manufacturing index slipped to 57.3 in April, its second drop in a row and the lowest level in nine months. While this still suggests solid growth, purchasing managers have tempered their enthusiasm.

Market reaction: Despite the upbeat economic news, which could keep interest-rate hikes in play, the Dow Jones Industrial Average DJIA, -0.13%   was poised to struggle Thursday. The yield on the 10-year Treasury note TMUBMUSD10Y, +0.00%  was steady near a 7-year high at 3.11%.

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