Local manufacturing shrinks, but less sharply
The Philadelphia area's manufacturing sector declined in January for the 13th time in 14 months, the Federal Reserve Bank of Philadelphia said today. But the degree of the decline was less severe than in December.
The Philadelphia area's manufacturing sector declined in January for the 13th time in 14 months, the Federal Reserve Bank of Philadelphia said today. But the degree of the decline was less severe than in December.
The worst part of the overall manufacturing index was employment, which fell to the second-lowest reading since the bank's survey began in 1968 as 48 percent of those surveyed said jobs declined this month from December. Nine percent said employment rose from a month ago. The survey's lowest employment reading was in April 1975, immediately after a 16-month recession officially ended.
Also, participants this month saw a continuing drop in employment for six months, the worst forecast ever for the survey, said Mike Trebing, senior economic analyst at the Philadelphia Fed.
The overall index of current manufacturing activity remained negative, though it improved to -24.3 this month from -36.1 in December. A negative number means the manufacturing sector is shrinking rather than growing.
The period of decline for the Philadelphia index corresponds to the nationwide recession that began in December 2007. Factories across the country are curtailing production as consumer spending weakens and global demand falters amid a deepening recession.
Except for employment, the manufacturers' outlook offered some hope for better conditions by midyear.
"Most of the survey's indicators of future activity improved, suggesting that the region's manufacturing executives expect declines to bottom out over the next six months," the Fed said. In particular, manufacturers forecast improvements in new orders and shipments by summer.
In reporting on present activity, participants cited weakness in new orders, shipments, unfilled orders and delivery times.
The Philadelphia Fed covers eastern Pennsylvania, South Jersey and Delaware.
